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Lockheed Martin SWOT & PESTLE Analysis

ID : 52493653| Dec 2018| 15 pages

COMPANY PROFILE -Lockheed Martin

Business Sector :Aerospace and Defense

Operating Geography :United States, Global

About Lockheed Martin :

Lockheed Martin Corp is a global security and aerospace company which was formed by merger of Lockheed Corporation and Martin Marietta Corporation in 1995. It operates in four business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission System (RMS) and Space. It engages in research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. It is headquartered in Bethesda, Maryland and employees around 100,000 people worldwide as of January 2019. The major part of its sales come from the U.S. Department of Defense and it is also a leading contractor for the U.S. Department of Energy and the National Aeronautics and Space Administration (NASA). The company has 590+ facilities in 50 states throughout the U.S.; internationally, business locations in 52 nations and territories
Lockheed Martin’s mission statement as per their website is “To solve complex challenges, advance scientific discovery and deliver innovative solutions to help its customers keep people safe.”
Lockheed Martin’s vision statement is to “Be the global leader in supporting our customers' missions, strengthening security and advancing scientific discovery.”

Lockheed Martin Revenue :


US $51,048 million (FY ended Dec 31st 2017) (year-on-year growth of 8.04%)
US $47,248 million (FY ended Dec 31st 2016)

Competitive Analysis of Lockheed Martin

SWOT
PESTLE
The SWOT analysis of Lockheed Martin is presented below:
Strengths
Weaknesses
1. Strong product portfolio
2. Provides customers with multi-layered and integrated air and missile defense
3. Huge scale of organization
4. Technological expertise and R&D
5. Consistently strong financial and operational performance
1. Heavy dependence on U.S. Government
Opportunities
Threats
1. Rising demand of defence equipment
2. Expanding product line with AI
3. Acquiring international firms
1. Increased domestic as well as international competition
2. Cyber or other security threats
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of Lockheed Martin

 

Strength

1. Strong product portfolio: With more than 200 specialized products that Lockheed Martin offers, its product portfolio is strong enough. It has products not just for air, water and land but space as well. Advanced Train management system, Laser weapon system, Aegis combat system, Warfare Destroyer, Surveillance radars, Airborne Lab, Tactical missile system, Logistic information system, Training systems, Simulators, Combat trainer, Cognitive control and demand, Common Vehicle, Cyber warfare, Fighters, Transceivers, GPS, Hybrid Airship, Ballistic Missiles, Spectrograph, Meteorological instruments, Oceanographic instruments, Helicopters are few products just to mention. Moreover, it has starting working towards adding onto new products to this portfolio with its research in neuroscience for brain simulators as well. In area of artificial intelligence, it is researching to enhance existing products’ capabilities by infusing it with AI. In area of cyber security as well, it is creating systems which are safer and difficult to crack. Such a wide and diverse range of products under single name, Lockheed Martin, is its biggest strength.

2. Provides customers with multi-layered and integrated air and missile defense: Lockheed Martin is known for its multi-layered and integrated air and missile defense systems viz. PAC-3, Aegis Combat System, THAAD, etc. These systems continue to improve and serve as the strengths of Lockheed Martin. PAC-3, a high-velocity interceptor, defends against incoming threats, including tactical ballistic missiles, cruise missiles, and aircraft. A contract worth $944 was won by Missiles and Fire Control or MFC for production and delivery of PAC-3 which shows the continued demand for these system in the market. Apart from this, a plan to purchase the Aegis Combat System from Rotary and Mission Systems or RMS which are used to intercept a medium-range ballistic missile and track and destroy multiple live targets were approved by Japan’s cabinet. THAAD or Terminal High Altitude Area Defense system also came up with its first intermediate range ballistic missile intercept, and the 15th successful intercept in 15 attempts for the THAAD system since 2005. THAAD system continues to prove its ability to intercept and destroy many classes of ballistic missile threats to protect citizens, deployed forces, allies, and international partners around the globe.

3. Huge scale of organization: It is not only about the wide array of 200+ specialized products it creates but it is also about the overall scale of organization at which it operates. As per 2017 data, it has 100,000 total employees out of which more than 7200 are outside the U.S. and are spread across 52 countries at more than 400 facilities. More than 70 nations are dependent on Lockheed Martin’s products and technologies. In the U.S., it supports more than 15,000 suppliers in its value chain by providing $19.3 billion and $5.7 billion outside the U.S in 50 countries. With $51.05 billion of revenue it was able to get net income of $2 billion, increase annual dividend by 10% and provide returns of 81% to its stockholders. With such huge numbers on its records, Lockheed Martin is truly operating at humongous scale which is not easily replicable by any new entrant in the market. Thus, creating a strong entry barrier for others and protecting itself from new competitors, which itself can be considered as one of the strengths.

4. Technological Expertise and R&D: Lockheed Martin is one of the most technologically advanced companies. It has created a high entry barrier in its market for new entrants by investing heavily in its Research and Development. It constantly strives to be ahead of the time by creating new and advanced solutions to meet future energy, defense, space, social, logistic, cyber, marine etc demands. Lockheed Martin conducts R&D under two categories viz. customer-sponsored contracts and with own independent R&D funds. Costs incurred in doing R&D for customer-sponsored contracts is covered in the customer’s contract under net sales and cost of sales. Independent research includes basic research, applied research, development, systems and other concept formulation studies and is funded by itself. In 2016 the independent R&D costs charged to cost of sales were $998 million and it increased to $1.2 billion in 2017. Having being able to dedicate huge amounts in R&D over the years has made it technologically advanced and thus it is the company’s one of the biggest strengths.

5. Consistently strong financial and operational performance: One of the biggest strengths of Lockheed Martin is that it is highly efficient at using its resources and making out the most of what it has. As of Q3 2018, it has a high asset turnover ratio of 1.11% which is far greater than that of its competitors (Raytheon Company: 0.87%; The Boeing Company: 0.94%; Northrop Grumman Corp: 0.88%; General Dynamics Corp: 0.83%). High asset turnover ratio suggests that Lockheed Martin is using its assets highly efficiently to fetch its sales or revenues. 1.11 means that the company is generating 0.11 extra over its investment of $1 in their assets. Also, the company has higher return on invested capital (23.64%) than its peers (Raytheon Company: 19.47%; The Boeing Company: 20.92%; Northrop Grumman Corp: 16.61%; General Dynamics Corp: 17.10%) which reflects how efficiently the company is at allocating the capital under its control to profitable investments. These high ratios are the representation of highly efficient operation at Lockheed Martin. Along with this, Sales of $51.0 billion, up eight percent versus 2016; dividend of $2.2 billion paid in 2017, and increased the quarterly dividend by 10 percent in the third quarter to $8.00 annually; Segment operating profit of $5.1 billion; Segment margin of 10.0 percent; Net earnings from continuing operations of approximately $1.9 billion are some financial figures showcasing the consistent strong financial performance.

Weakness

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Opportunity

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Threat

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Major Brands :

  • F-35 Lightning II Joint Strike Fighter
  • C-130 Hercules
  • F-16 Fighting Falcon
  • F-22 Raptor
  • C-5M Super Galaxy

Key Business Segments / Diversification :

Lockheed Martin
Aeronautics Missiles and Fire Control (MFC) Space Autonomy and Robotics
Rotary and Mission Systems (RMS) Cyber Security Directed Energy
Sensor Technology Electronic Warfare
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References used in Lockheed Martin Analysis Report

1. Lockheed Martin Annual Report 2017: https://www.lockheedmartin.com/content/dam/lockheed-martin/eo/documents/annual-reports/2017-annual-report.pdf

2. Lockheed Martin Sustainability Report 2017: https://www.lockheedmartin.com/content/dam/lockheed-martin/eo/documents/sustainability/Lockheed_Martin_Sustainability_Report_Full_2017.pdf

3. 2018 Lockheed Martin Fact Sheet: https://www.lockheedmartin.com/content/dam/lockheed-martin/eo/documents/2018-lockheed-martin-fact-sheet.pdf

4. About Lockheed Martin: https://www.lockheedmartin.com/en-us/who-we-are.html

Copyrights and Disclaimer

Lockheed Martin SWOT and PESTLE analysis has been conducted by Aishwarya Tirthgirikarand reviewed by senior analysts from Barakaat Consulting.

Copyright of Lockheed Martin SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Lockheed Martin SWOT & PESTLE Analysis
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