SWOT ANALYSIS ON LOCKHEED MARTIN
Lockheed Martin is a United States aerospace, defence, security, and advanced Technology Company with worldwide interests. It was formed by the merger of Lockheed Corporation with Martin Marietta in March 1995. It is headquartered in Bethesda, Maryland, in the Washington Metropolitan Area. Lockheed Martin employs 140,000 people worldwide. Robert J. Stevens is the current Chairman, President, and Chief Executive Officer.
Lockheed Martin is among the very largest defence contractors in the world, and in 2008 70% of Lockheed Martin's revenues came from military sales.
The company has received the Collier Trophy twice - in 2001 for being part of developing the X-35/F-35B LiftFan Propulsion System, and again in 2006 for leading the team that developed the F-22 Raptor fighter jet.
Lockheed Martin is the world’s largest defence contractor by revenues. The company is a leading aerospace manufacturer and producer of global security and advanced technology systems. Lockheed Martin was formed in 1995 by the merger of Lockheed with Martin Marietta and generated about US$ 42.73 billion as revenues in 2008. It is headquartered in Bethesda, Maryland and generates about 83% of its total revenues by selling advanced systems & technologies to the US Government.
SWOT ANALYSIS ON LOCKHEED MARTIN:
Strengths:
- Solid product portfolio (aeronautics, electronic & space systems, integrated solutions, others)
- Strong relationship with the US government
- High asset turnover
- Strong financial performance
Weaknesses:
- Close to 85% of revenues come from one source: US government
- Softness in aeronautics division
- Revenue per employee significantly lower compared to Boeing, Rolls Royce
- Low price approach achieved at the expense of employee salaries and high turnover
Opportunities:
- Order backlog simply needs to be fulfilled
- Recent acquisitions (i.e.,. Aculight Corporation)
- Rising defence spending in the US and worldwide
Threats:
- Rising commodity prices
- Government contracts & future regulation
- Potential decreases in US government spending
- Employee retention & availability
COMPREHENSIVE SWOT ANALYSIS ON LOCKHEED MARTIN
Strengths;
- Lockheed Martin has a very strong relationship with the U.S. defence agencies. As the largest government contractor, it has produced military mainstays like the F-16 and A-10.
- Lockheed Martin has also reached into the Navy’s area by work on Littoral Combat Ships, small, module ships that are predicted to carry the Navy out of a Cold War mindset and into a peacekeeper and diverse combat role.
- A $74.8 billion backlog primarily in fighter jets, Lockheed Martin is guaranteed growth and sustainability for two years, even if they never sought another contract.
- According to Datamonitor, Lockheed Martin is expected to have up to 4,500 fighters built or contracted within the next 20 years, more than nine times the current level.
- Lockheed Martin is in a very strong financial position that is continually improving. In 2002, it increased profits by 11%. This increased to 20% in 2003 and another 11% increase in 2004.
Weakness
- The U.S. Department of Defence and U.S. intelligence agencies comprised of approximately $21.6 billion Lockheed Martin’s sales in 2004 (their most recently published year). At approximately 58%, this is by far its largest group of customers. Unfortunately, this creates a major dependence on the U.S. Government in order to survive. Without diversification of customers if another company stepped up Lockheed Martin would be in a financial bind.
- The company’s F/A-22 development program is dealing with a large amount of criticism and controversy.
- The senator has called out for the program’s termination, which would drastically reduce the numbers Lockheed Martin would be able to sell.
- Another recent problem that has arisen is the company’s merger with the much sought after company Titan failed in 2004.
- The merger would have allowed significant leverage for expanding Lockheed Martin’s business. Titan was highly desired for their ties to the intelligence programs, which are the fastest growing sectors in the defence business.
Opportunities
- The US department of defence is looking to upgrade their weapons and technology, some of which has not been improved upon since Reagan.
- There are also the additional weapons that are needed for the conflict in Iraq. Finally, the creation of the department of homeland security requires large acquisitions of defence systems and new technology.
- Recent market trends indicate that the demand for classified and other civilian satellites is increasing.
- The GPS III and other intelligence satellite networks are currently being improved and expanded. This provides ample opportunity for Lockheed Martin to obtain contracts and increase business potential in the upcoming years.
- NASA hopes to have a replacement ready as soon as possible to take over vital projects such as space station maintenance, satellite repair and Hubble Telescope upkeep. Lockheed Martin is a vital contributor to space shuttle replacement technologies.
- Lockheed Martin has always maintained large focus on research and development. This has created a large opportunity for them to stay ahead of their competitors, technologically.
- They focus their developmental efforts towards advanced development aircraft, advanced maritime platforms, electronics, energy services and engineering services.
Threats:
- 80% of Lockheed Martin’s business comes from the US government. This means a lot of red tape.
- The company is inundated with laws and regulations and is required to disclose all of the pricing and cost information in connection with contracts and contract negotiations.
- The government also has control over for which costs the company be reimbursed. Any violation of these laws and regulations can result in fines, penalties, or loss of current and future contracts.
- One threat that continues to haunt Lockheed Martin is the risk of satellite launch failures. In 1999, they suffered significant losses and bad publicity due to three launch failures.
- Due to the high cost and capital involved in satellites, failure to orbit a completed satellite dramatically increases expenses and cuts into profit margins.