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  • September 2020
  • Teaching Note
  • HBS Case Collection

TransDigm in 2017: The Beginning of the End or the End of the Beginning?

By: Benjamin C. Esty and Daniel Fisher
  • Format:Print
  • | Language:English
  • | Pages:42
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Abstract

Teaching Note for HBS Case No. 720-422. TransDigm was a highly acquisitive company that manufactured a wide range of highly engineered aerospace parts for both military and commercial customers. Over the ten years ending in 2016, its stock price had increase ten times, and both EBITDA and revenues had grown at compound annual rates in excess of 20%. But in early 2017, investors, customers, and government officials began to question the implementation, sustainability, and ethics of the firm’s unique value creation strategy. That strategy consisted of three parts: value-based pricing, cost reductions, and new product development. In the short term, CEO Nick Howley had to decide whether to respond to the barrage of criticism; in the longer term, he had to decide whether to change the firm’s highly successful strategy.

Keywords

Value Capturing; Pricing Strategy; Supplier Power; Buyer Power; Porter's Five Forces; Bargaining Power; Monopoly; Aerospace; Acquisition Strategy; Value Drivers; Ethical Behavior; Regulation; Growth Strategy; Business Ethics; Defense; Procurement; Sustainability; Value-Based Business Strategy; Acquisition; Ethics; Private Equity; Financial Strategy; Growth Management; Performance Evaluation; Business Strategy; Competitive Strategy; Horizontal Integration; Value Creation; Competitive Advantage; Aerospace Industry; Air Transportation Industry; United States

Citation

Esty, Benjamin C., and Daniel Fisher. "TransDigm in 2017: The Beginning of the End or the End of the Beginning?" Harvard Business School Teaching Note 721-353, September 2020.
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About The Author

Benjamin C. Esty

Finance
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