Raytheon SWOT & PESTLE Analysis
ID : 52397553 | May 2018 | 14 pagesCOMPANY PROFILE - Raytheon Company
Business Sector : Defence Contractor, Aerospace and Defence
Operating Geography : Waltham, Massachusetts, United States, North America
About Raytheon Company : Raytheon Company (Raytheon) is a provider of integrated defence systems, missile systems, and intelligence and information systems. It is a technological and innovation leader which specialises in civil government, defence and cyber security solutions. It was founded in 1922 and adopted its present name in 1959. It provides state of the art electronics, sensing, C5I™ products and services, mission system integration, effects and mission support services. It is the world's largest producer of guided missiles. Raytheon has its headquarters at Waltham, Massachusetts. As of 2018 it has 64,000 employees worldwide. It trades on NYSE as RTN.
Its mission statement states 'One global team creating trusted, innovative solutions to make the world a safer place.'
It has a USP that is unique selling point of "Customer Success is our mission".
Raytheon Company Revenue :
U.S $25.348 billion (2017)
U.S $24.1 billion (2016)
Competitive Analysis of Raytheon Company
| 1. Backlog 2. Strong financial Performance 3. Research and Development 4. New Contracts | 1. Reliance on the US Government Contracts 2. Business Performance: Integrated Defence Systems 3. Lawsuits soiling Company reputation |
| 1. Expanding Global Cyber security Market 2. Rising Demand for Unmanned Aerial Vehicles | 1. Government Contract Compliance 2. Foreign Exchange Risks 3. Competitive Markets 4. Regulations |
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Strength
1. Backlog: Strong order backlog help the company further enhance its position in the market, by enhancing its financial performance. Raytheon has a considerable order backlog, which ensures strong future revenue. In FY2016, the company had a total order book of US$36,855 million, of which US$25,604 million was funded backlog. The major orders include contracts from the US Government, foreign military sales, direct foreign government, foreign non-government, domestic non-US Government and international clients
2. Strong financial performance: Strong financial performance improves the investor’s confidence on the company and provides it required capital to pursue its growth plans. In FY2016, the company’s revenue increased by 3.5% from US$23,247 million in FY2015 to US$24,069 million. This was primarily due to increase in the revenue of its IIS, MS, SAS, and Force print segments by 1.4%, 7.9%, 7%, and 72.6%. The company’s operating income increased by 7.5% to US$3,240 million in FY2016 compared to US$3,013 million in FY2015. Similarly, its net income increased by 6.6% from US$2074 million in FY2015 to US$2211 million in FY2016
3. Research and Development: Raytheon’s R&D capabilities help it enhance its existing products and solutions, and develop new products and services to meet the changing and rising demands of its customers. It also enables the company to grab new market opportunities. The company conducts R&D activities majorly for product development for the US Government. Raytheon also performs funded R&D activities under the US Government contracts.
4. New Contracts: New contracts could provide a sustainable source of revenue to the company. In February 2017, Raytheon and Tata Advanced Systems signed an MOU to together develop Stinger air defence missile components. In September 2016, it secured contract from the US Air Force, to construct the Advanced Medium Range Air-to-Air Missiles (AMRAAM) for US$573 million. In April 2016, the company secured a contract from US Navy to provide Engineering and Manufacturing Development models.
Weakness
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Opportunity
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Threat
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| 1. Negative factors for the US defence industry 2. Increasing Need for Reforms 3. Uncertainties from the Trump Factor | 1. Competition may reduce revenues and market share and limit future market opportunities 2. Issues with component availability, subcontractor performance |
| 1. Retaining world class talent | 1. Protection of intellectual property rights |
| 1. Extensive procurement rules and regulations 2. Unanticipated changes in tax provisions 3. Negative audit or investigatory finding | 1. Risk of material environmental liabilities |
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Political
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Economic
1. Competition may reduce revenues and market share and limit future market opportunities: Increased competition in Raytheon’s core markets as a result of continued defence industry consolidation, including cross-border consolidation of competition, and the expansion of competitors’ capabilities throughout the supply chain through vertical integration, each of which has enabled companies to enhance their competitive position against us. Additionally, some customers, including the DoD, are increasingly turning to commercial contractors, rather than traditional defence contractors, for information technology and other support work. All this will result in declines in revenues and market share.
2. Issues with component availability, subcontractor performance: These issues may affect company’s ability to manufacture and deliver its products and services. It is dependent upon the delivery by suppliers of materials and the assembly by subcontractors of major components and subsystems used in its products in a timely and satisfactory manner and in full compliance with applicable terms and conditions. Some products require relatively scarce raw materials. It is also subject to specific procurement requirements that limit the types of materials it uses and may affect the supply chain process. In addition, it has to conduct diligence and provide disclosure regarding the use of certain minerals, known as conflict minerals, which may impact its procurement practices and increase costs.
Social
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Technological
1. Protection of intellectual property rights: Due to threat to intellectual property rights which many companies are unable to protect; could affect its competitiveness. Raytheon owns many U.S. and foreign patents and patent applications, and have rights in unpatented know-how, data, software, trademarks and copyrights. In many of Raytheon’s patents and intellectual property the U.S government has its licences. These are utilized in government contracts. However the government may authorize others including its competitors to use such patents and intellectual property for government and other purposes. Hence in the future to avoid the breach of information and patents it would have to enter into confidentiality and intellectual property assignment agreements with employees and into non-disclosure agreements with its suppliers and appropriate customers.
Legal
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Environmental
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References used in Raytheon Company Analysis Report
1. https://www.raytheon.com/responsibility/rtnwcm/groups/public/documents/content/raytheon_crr.pdf
2. http://investor.raytheon.com/phoenix.zhtml?c=84193&p=irol-reportsannual
3. https://www.raytheon.com/news/technology_today/2017_i1/pdf/2017_i1.pdf
4. http://raytheon.mediaroom.com/2017-10-24-Fifth-annual-survey-by-Raytheon-Forcepoint-and-NCSA-finds-young-adults-interest-in-cybersecurity-careers-stagnant
5. https://www.raytheon.com/responsibility/sustainability/index.html
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Raytheon Company SWOT and PESTLE analysis has been conducted by Mohit Bhat and reviewed by senior analysts from Barakaat Consulting.
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