Strategies in Enterprise Ecology: Symbiotic Models for Commercial Aviation as an Enterprise of Enterprises

Student research poste

A framework for defining sustainable energy transitions:principles, dynamics, and implications

While partial energy transitions have been observed in the past, the complete transition of a fossil-based energy system to a sustainable energy one is historically unprecedented on a large scale. Switching from an economy based on energy stocks to one based on energy flows requires a social paradigm shift. This paper defines Sustainable Energy Transition (SET) and introduces a set of five propositions that prescribe its sustainability. The propositions are comprehensive, spanning environmental constraints, resource availability, equity, and the transition dynamics from an energy and economic accounting perspective aimed at addressing all three pillars of sustainability. In order to rigorously define the constraints of SET a theoretical energy economy framework is introduced along with the concept of the renewable energy investment ratio. The paper concludes with a practical application of the SET propositions on the global energy system and identifies an order of magnitude underinvestment in the renewable energy investment ratio in comparison to the estimated level needed for a controlled transition that satisfies all propositions. The option of drastically increasing this ratio in the future may not be available as it would reduce societally available energy, imposing unacceptably high energy prices that would induce either fossil resource extraction beyond the safely recoverable resources or energy poverty

Strategies in Enterprise Ecology: Symbiotic Models for Commercial Aviation as an Enterprise of Enterprises

Agenda: • Hypotheses • Background – Commercial Aviation Cycles – Enterprises and business cycles • A framework: Enterprise of Enterprises • Modeling Enterprise of Enterprises • Countercyclical strategies and symbiosi

Symbiotic strategies in enterprise ecology : modeling commercial aviation as an Enterprise of Enterprises

Thesis (Ph. D.)--Massachusetts Institute of Technology, Engineering Systems Division, Technology, Management, and Policy Program, 2007.Includes bibliographical references (p. 339-351).We investigate the effectiveness of strategic alternatives that are designed to dampen the cyclicality manifest in the commercial aviation (CA)-related industries. In this research we introduce the conceptual framework of Enterprise of Enterprises (EoE) as an extension and special case of a System of Systems, to facilitate the design of strategic alternatives in an enterprise ecosystem characterized by loosely coupled enterprises. The constituent enterprises in an EoE exhibit managerial and operational independence and have diverse value functions that are often viewed by the enterprises as zero-sum games. We argue that this may not always be the case; for example, in the CA EoE both airline and airframe manufacturers constituents would benefit from a steadier influx of aircraft that counters the current situation that is characterized by relatively stable demand growth rate for air travel while airline profitability and aircraft ordering fluctuate intensely. A strategic alternative geared towards this EoE-wide desired state is "symbiotic". In order to identify such strategies, we use the EoE framework to analyze the CA-related industries and to specify their local value functions and the salient interfaces among them based on an extensive review of the literature on commercial aviation. We develop working hypotheses about the driving mechanisms of the cycle in the CA EoE informed by the literature on economywide and supply chain cyclicality. To test these hypotheses, we extend a system dynamics model of commercial aviation. After testing several individual strategic alternatives, we find that capacity management is key to cycle moderation. We then compare two diverse, non-collusive ways for capacity management: faster aircraft deliveries and semi-fixed production schedules generated by long-term forecasts.(cont.) While both are promising, only the latter alternative is shown to be Pareto optimal. We also examine the potential synergistic effects from combining more than one strategic alternatives for which we also discuss implementation implications. The EoE framework and some of our findings can be applicable and generalizable to other industries facing intense cyclical behavior.by Sgouris P. Sgouridis.Ph.D

Game Theory Analysis of the Impact of Single Aisle Aircraft Competition on Fleet Emissions

To meet aviation’s CO2 emission reduction targets while maintaining mobility in the face of increasing effective fuel costs, technology innovation will be required. The single aisle commercial aircraft market segment is the largest by quantity and value, but has the longest running product lines. New aircraft programs offer the largest potential gains in fuel efficiency, but are risky and require large capital investments. Re-engining existing airframes reduces risk and capital requirements, but offers lower potential fuel burn improvements. Incremental improvements to existing aircraft lines may entail the lowest risk. It is hypothesized that competition has important effects on manufacturers’ decisions to innovate and that these effects must be considered when designing policies to reduce CO2 emissions from aviation. An aircraft program valuation model is developed to estimate expected payoffs to manufacturers under different competitive scenarios. A game theory analysis demonstrates how the incentives for manufacturers to innovate may be altered by subsidies, technology forcing regulations, increased effective fuel costs, the threat of new entrants, and long-term competitive strategies. It is shown that increased competition may result in incumbent manufacturers producing re-engined aircraft while increased effective fuel costs may result in new aircraft programs. Incumbents’ optimal strategies may be to delay the entry into service of new single aisle aircraft until 2020-24, unless technology forcing regulations are implemented.Mubadala Development Co

SCM/RSTP integration

Thesis (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division, Technology and Policy Program; and, (S.M. in Transportation)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2005.This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.Includes bibliographical references (p. 125-131).A systems perspective for regional strategic transportation planning (RSTP) for freight movements involves an understanding of Supply Chain Management (SCM). This thesis argues that private sector freight shippers and carriers do not simply need capacity improvements from the regional transportation system, but also a subtle understanding by public sector planners of their supply chain needs. The private and the public sector have different agendas and planning horizons but at the same time may have common interests in the region that involve economic robustness, environmental health, and social cohesiveness what is known as sustainability. We investigate how the largely public sector RSTP and private-sector SCM relate and suggest architectures for an integrated RSTP/SCM planning process.by Sgouris P. Sgouridis.S.M.in TransportationS.M

Game Theory Analysis of Aircraft Manufacturer Innovation Strategies in the Face of Increasing Airline Fuel Costs

The air transportation system is a vital infrastructure that enables economic growth and provides significant social benefits. Future increases and volatility in crude oil prices, as well as environmental charges, are likely to increase the effective cost of fuel. We investigate the impacts of effective fuel cost increase on the US air transportation system historically and perform a game theory analysis of the impact of manufacturer competition on the introduction of new, more fuel efficient aircraft. The cost of jet fuel increased 244% between July 2004 and July 2008, providing a natural experiment to evaluate how fuel price increase affected continental US networks and fleets. It was found that non-hub airports serving small communities lost 12% of connections, compared to a system-wide average loss of 2.8%. Increased effective fuel costs will provide incentives for airlines to improve fleet fuel efficiency, reducing the environmental impacts of aviation, but may cause an uneven distribution of social and economic impacts if small communities suffer greater loss of mobility. Government action may be required to determine acceptable levels of access as the system transitions to higher fuel costs. Technology innovation may act as a long-term hedge against increasing effective fuel costs, enabling mobility to be maintained. The single aisle commercial aircraft market segment is the largest, but has the longest running product lines. We hypothesize that competition has important effects on manufacturers’ decisions to innovate that must be considered when designing policies to reduce fleet emissions. An aircraft program valuation model is developed to estimate expected payoffs to manufacturers under competitive scenarios. A game theory analysis demonstrates how the incentives to innovate may be altered by subsidies, technology forcing regulations, increased effective fuel costs, the threat of new entrants, and long-term competitive strategies. Increased competition may result in incumbent manufacturers producing re-engined aircraft while increased effective fuel costs may result in new aircraft programs. Incumbents’ optimal strategies may be to delay the entry of new single aisle aircraft until 2020-24, unless technology forcing regulations are implemented.This work was supported by the MIT/Masdar Institute of Science and Technology under grant number Mubadala Development Co. Agreement 12/1/06. The authors wish to thank PARTNER for access to the Piano-X software package and Robert M. Peterson from the Boeing Corporation for his valuable feedback on the aircraft program valuation model. Any errors are the authors’ alone

Characterizing Three Engineering Systems Methods for Supporting Regional Strategic Transportation Planning Applied to Freight Systems

A systems perspective for regional strategic transportation planning (RSTP) for freight movements involves an understanding of Supply Chain Management (SCM). This paper starts from the premise that the public sector needs to enhance economic development in the form of providing and ensuring the operation of sufficient network capacity for freight needs but at the same time secure the region’s long term environmental and societal well being. The need for long-term integrated transportation planning that is sensitive to supply chain needs and environmental nuances can be supported by the use of engineering systems methodologies. Here we demonstrate the use and potential of three such methods: Design Structure Matrix (DSM), System Architecture (SA) and System Dynamics in support of a transportation planning process that integrates SCM considerations into RSTP