Loading presentation...

Present Remotely

Send the link below via email or IM

Copy

Present to your audience

Start remote presentation

  • Invited audience members will follow you as you navigate and present
  • People invited to a presentation do not need a Prezi account
  • This link expires 10 minutes after you close the presentation
  • A maximum of 30 users can follow your presentation
  • Learn more about this feature in our knowledge base article

Do you really want to delete this prezi?

Neither you, nor the coeditors you shared it with will be able to recover it again.

DeleteCancel

Make your likes visible on Facebook?

Connect your Facebook account to Prezi and let your likes appear on your timeline.
You can change this under Settings & Account at any time.

No, thanks

LOCKHEED MARTIN

No description
by

Kate Jones

on 24 June 2014

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of LOCKHEED MARTIN

LOCKHEED MARTIN INDUSTRY OVERVIEW
Aeronautics Industry

85% of Lockheed Martin's revenues in 2011 came from government defense contracts

4 Core Business Segments

Aeronautics, Space Systems, Electronic Systems, and Information Systems and Global Solutions

Earnings Per Share in 5-year period ending in 2011

Lockheed Martin : $7.02 - $7.81
General Dynamics : $5.10 - $6.94
Northrop : $4.12 - $7.52
Boeing : $1.87 - $5.33

Strategic Issues

Declining federal defense budget, international market risks, governmental regulations, and controlling costs
External Environment Analysis
Porter's 5 Forces
Intangible Resources
Versatility and adaptability in times of crisis
Tangible Resources
Recently downsized its workforce from 146,000 to 115,000 employees
Core Competencies & Capabilities
Lockheed Martin's main core competency is its ability to use its internal information systems and technology to innovate and design high quality products at affordable prices.
Competitor Analysis
SWOT Analysis
Strengths:

Strong ties with US government
Historical precedence in winning government contracts
High R&D expenditures to maintain competitive advantage
Long-term contracts, ensuring future revenues
High asset turnover

Weaknesses:


Aging workforce
85% of revenues from US government
Controlling Costs
Production lead time 10-20 yrs

Business Strategy
Focused Cost Leadership

-Specific customers with high customization levels

-Focused on keeping costs relatively low while offering high levels of customization through tech and innovation


*Driving costs lower would aid Lockheed in the long run

-Tapering government contracts
-defense cuts, budget constraints

-Standardization of products



Corporate Strategy
Related Constrained

-Diversified and highly customized

-4 company segments- work closely together
-capitalize on each others' competencies


*keeping related constrained has proven to work
for LM, but some products can be standardized for private consumers
International Strategy
Currently following a globalization strategy
-17% of sales outside USA
-seeks to expand presence
-recent sales in Japan and Israel despite slow industry growth

*No one can match USA defense spending
-budget cuts internationally
-create more standardized low-cost options

Risks
:
-political/legal climate
- export barriers

-Joint ventures to possibly alleviate risks
Alliances/Cooperation
Mergers and Acquisitions
-2006-- ISX, Pacific Arch & Engineers, Savi Technologies
-Years prior- bought out several IT and systems companies


Collaboration
-Alliant and Northrop Grumman to develop weapons systems for F22 and F35

*concentrated growth in related industry

Low
Threat of Substitute

Low
Threat of New Entrants
Low
Supplier Power
High
Buyer Power
Intense Rivalry
Government policies
Need for specialized HR
Continuous facility improvements
Economies of Scale
Large Exit Costs
Intense rivalry between several firms competing for few contracts
Largest competitor competes in commercial industry as much as defense
Suppliers have little power
Many suppliers compete for few contracts
Buyers have enormous power
U.S. Gov't is primary buyer, also controls policy that governs industry
Several firms compete for contracts from U.S.
Little threat of substitute
Products are unique and customized to each buyer
Contracts can last 10-20 years
Economic
Opportunities
Recent military initiatives provide growth in Aerospace and Electronic Systems industries
Its maturity in the market
Knowledge capital
Their mission statement/how they operate
Lockheed Martin F-35 Lightning II
Net income of $3.15 billion
Internal information systems to innovate and design new products
Threats:
A decrease in Defense budgets
Industry depends on international tensions
Dependent on gov't
Opportunities
Innovation is key to securing lucrative gov't contracts
Complexity of product requires specialized R&D
Threats:
New technologies become obsolete quickly
High cost for R&D
Technological
Lockheed Martin
ROA %:
7.97
ROE%:
120.57
Debt to Equity:
1.25
Total Asset Turnover:
1.21
Boeing
ROA %:
5.05
ROE%:
44.21
Debt to Equity:
.65
Total Asset Turnover:
.95
Northrop Grumman
ROA %:
7.38
ROE%:
19.39
Debt to Equity:
.56
Total Asset Turnover:
.93
Financial Ratio Analysis
External Environment Analysis
Demographic
Lockheed has very small commercial presence.
Majority of revenue comes from U.S. government.
There are no actual effects of demographic on business
Threats:
Decreased support for military operations, including defense
Strategic Arms Treaty
Opportunities
There has been lobbying for increase in defense budget
Socio-cultural
Recent exploration into renewable energy and healthcare solutions
Aeronautics, space systems, electronic systems, and information systems and global solutions
Secure, extend, expand, and enable
Sector:

Aerospace
# of Employees:

168,400
Market Cap:

$96 billion
Market Commonality:

High
Resource Commonality:

High


Strengths:
Strong lobbying position
Enough capital for successful R&D
Competes over several industries
Technological expertise
Weaknesses:
Depend on success in commercial sector
Labor Disputes
Behind Lockheed in Defense sector
Management split between commercial and government
Opportunities
Threats
Maintain positioning at top in Defense and Electronic Systems
Superior technology in defense industry
Boeing has strong lobbying power
Can maintain profitability from commercial sector when defense sector takes hit
Boeing is focusing more on defense to attain lucrative future contracts
Opportunities:

US government defense contracts
IT improvements
Growing global market for aeronautics industry
Investment in Electric Systems unit: makes 30% of firm's revenue
Order backlog needs to be fulfilled


Threats:

Pension expenditures/cost of new hires
Decrease in US government spending
Political environment
Termination of lagging contracts
Recommendations
Expand defense division into international markets via joint ventures or foreign government alliances

Continue using focused cost leadership strategy in order to lower costs and increase efficiency

Use technological capabilities to standardize products fit for commercial sector

Lobby for streamlined ITAR process
Value Chain Analysis
Value created internally by reducing R&D costs through operations
Centralized executive leadership
Effective government lobbying
Full transcript