Porter’s Five Forces Analysis of Lockheed Martin
|Industry||Aerospace and Defense|
|Headquarters||Bethesda, Maryland, US|
|CEOs||James D. Taiclet Jr.|
|Revenues||US $ 67.04billion,FY 2021
US $ 65.98 billion, FY 2022
|Profit||US$ 6.31 billion, FY 2021
US$ 5.73 billion, 2022
|Competitors||Boeing, Raytheon Technologies|
Headquartered in Maryland, United States reaching the 55th place in the Fortune 500 List.The company is specialized providing services to Aeronautical and Defense Industry with arm sales more than US$ 58 billion only in FY 2020 and with over US$ 60 billion in FY 2021. The Company was founded by Allan Hainess and Malcolm Lockheed and Glenn L.Martin in 1912, when the company started taking officially flights. The company is present in more than 50 countries and serving with 114000 employees globally.The Company has declared Net Assets worth of US$ 52.8 billion as of FY 2022.
It is also declared “largest arm selling company” by Statista while Raytheon and Boeing are following companies by selling arms worth of 41.85 billion and 33.42 billion as of FY 2021.
Today we are going over the Porter’s Five Forces Analysis of Lockheed Martin:
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is used to determine the competition and profit margin in the Industry and guide the company’s to keep strategizing its operations in a better competitive position. It is invented by Professor Micheal E. Porter in 1979,at Harvard Business School.
Lockheed Martin Rivalry among Existing Competitors
- Lockheed Martin Business: The Company has following four main business divisions including Aeronautics, Missiles and Fire Control, Rotary and Mission System and Space.
- Lockheed Martin Business Segmentation Revenue Analysis FY 2022 and FY 2021: Net sales of business segments of Lockheed Martin was as follows: Aeronautics generated US$ 26.98 Billion, Missiles & Fire Control US$ 11.317 Billion, Rotary and Mission System US$ 16.14 Billion and US$ 11.53 in FY 2022.
Aeronautics generated US$ 26.74 Billion, Missiles & Fire Control US$ 11.69Billion, Rotary and Mission System US$ 16.78 Billion and US$ 11.84 in FY 2022.
- Lockheed Martin Business Geographical Presentation Revenue Analysis FY 2022 and FY 2021: The Company generated US$ 49.05 Billion from United States, US$ 6.26 billion from Europe, US$ 5.47 billion from Asia Pacific, US$ 3.79 from Middle East and 1.38 billion from others in FY 2022.
The Company generated US$ 48.60 Billion from United States, US$ 6.76 billion from Europe, US$ 6.10 billion from Asia Pacific, US$ 4.25 from Middle East and 1.31 billion from others in FY 2022.
- Raytheon : The Company gave a stiff competition to Lockheed Martins by serving military and aerospace industry specialized in providing services to military and defense industry. The company gave a record revenue of US$ 64.38 billion with a Net Income of US$ 3.86 in FY 2021 and a record revenue of US$ 67.07 billion with a Net Income of US$ 5.216 billion as of FY 2022 .
- Boeing:Boeing is also one of the leading companies in this industry which gave a record revenue of US$ 62.28 Billion in FY 2021 and US$ 66.60 Billion in FY 2022.
Lockheed Martin Threat of New Entrants
- Research, Designand Capital Expenditure: For specific this as specialized industry research, design with Technological Application is utmost important for delivery value added services and products. The Aeronautics segment involved is research and design at Lockheed Martins.
The company expensed out US$ 461 Million on Aeronautics, while US$ 253 Million in Missiles and Fire Control, US$ 266 Million in Rotary and Mission Systems and US$ 391 Million in Space Segment as Capital Expenditure as of FY 2022.
The company expensed out US$ 477 Million on Aeronautics, while US$ 304 Million in Missiles and Fire Control, US$ 279 Million in Rotary and Mission Systems and US$ 305 Million in Space Segment as Capital Expenditure as of FY 2021.
For entering and competing any such company which is so closely aligned with the government and serving majorly to the government’s defense industry with such huge capital investments is not possible.
- AI Implementation and Latest Technological AdvancementLockheed Martin is applying latest AI methods specially in the field of Naval radars for catching patterns in the data which substantially improved the identifying and detecting ability of Aegis Fire Control System.
Lockheed Martin Bargaining Power of Suppliers
- Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR): Lockheed Martin is providing equal opportunity to it’s supplier portfolio including as active supporter of programs like Small Business Innovation Research (SBIR) & Small Business Technology Transfer (STTR) ,these are government designed programs for research and innovation in small businesses. Lockheed Martin mentored various supplier if different stages of these programs including technology transfer to mentoring and project evaluation.
- Supplier Diversity,Ethics and Sustainability: The Company has launched different programs including the “Supplier Code of Conduct” which covers from environment protection to human trafficking and conflict minerals mining issues. Lockheed Martins also partnered with electronic waste (e-Waste) vendors and also launched e-Steward certification program.
Lockheed Martin Bargaining Power of Buyers
- Lockheed Martin’s Customer Base – USA Government is one of the biggest client of the company as 73% of the total sales of US$ 66 billion is generated from US government also 64% is from Defense Department of USA while 26% of the revenue generated from global clients including military and defense sources and 1% is generated from commercial clients from US, declared by Lockheed Martin in the Annual Report FY 2022.
So US Government and US Government decisions making has substantial influence on the decision making and business operations of Lockheed Martin’s operations.
- Technological Leadership: As the company is standing in global leadership and have edge over other companies also in terms of turnover, operations and technological advancement. The governments and international clientele do not have much bargain power especially in this high-end industry.
Lockheed Martin Threat of Substitute Products or Services
- US Governmental Financial Situation and Strategic Decision Making As per the current situation U.S Government with a debt of US$ 31.4 trillion is expected to default in such circumstances the payments and operations with vendors are expected to effect.
- International Financial Crises –Lockheed Martin Financial Crises and Debt Situation The Company already have a heavy debt portion of US$ 43.61 Billion while the equity portion of US$ 9.26 Billion in FY 2022 in comparison to US$ 39.91 Billion while the equity portion comprises of US$ 10.95 Billion in FY 2021.The Lockheed Martin recently became one of the biggest corporate bond issuer while it’s debt increased from Raytheon Technologies and other competitors.
- Lockheed Martin History
- Forbes, Lockheed Martin, Available at Forbes
- Fortune 500, Lockheed Martin. Available at Fortune 500
- Lockheed Martin Annual Report FY 2022
- The founding of Lockheed Martin. Available at Lockheed Martin
- Statista (August 5, 2022) Lockheed Martin – Statistics and Facts/ Statista. [online] Availableat Statista
- Statista (January 5, 2023) Largest arms-producing and military services companies worldwide in 2021, by arms sales (in million U.S. dollars)- Statistics and Facts/ Statista. [online] AvailableatStatista
- Statista (March 28, 2023) Capital expenditures of defense technology supplier Lockheed Martin from 2010 to 2022,by business segment (in million U.S. dollars) – Statistics and Facts/ Statista. [online] AvailableatStatista
- Raytheon Technologies Year 2021 and Year 2022 , Financial Statements
- Raytheon Technologies Fortune 500
- Boeing ,Annual Report 2021 and 2022
- Lockheed Martins, Annual Report 2021 and 2022
- Lockheed Martin (January 10, 2023) Artificial Intelligence and Aegis: The Future is here. Available at Lockheed Martin
- Raytheon Technologies Corporation – statistics & facts(Sep 22, 2022) | Available at Statista
- NewYork Times (January 22,2023) How the U.S Government Amassed $31 Trillion in Debt
- Lockheed Martin ,Suppliers
- Morningstar Investor (May 25,3023) Lockheed Martin is latest U.S. issuer to tap corporate-bond market ahead of potential debt-ceiling turmoil. Available at Morningstar Investor
- Lockheed Martin, Supplier Ethics, How Effective is Your Ethics Program?
- Lockheed Martin ,Environmental Stewardship