Porter’s Five Forces Analysis of Raytheon Technologies
|Name||Raytheon Technologies Corporation|
|Industry||Aerospace & Defense|
|Founded||July 7th ,1922|
|Headquarters||Waltham, Massachusetts,United States|
|CEOs||Gregory J. Hayes|
|Revenues||US $64.388 billion ,Dec 31st 2021
US $ 67.074 billion ,Dec 31st 2022
|Profit||US $3.864billion ,Dec 31st 2021
US $ 5.216 billion, Dec 31st 2022
|Competitors||Lockheed Martin, SSL (Space Systems Loral), BAE Systems, Boeing and Engility.|
Raytheon Technology engages in the manufacturing of defense and aerospace commercially. The company was founded in 1922 by Laurence Marshall, Dr.Vannevar Bush and Dr.Charles G.Smith.Thetotal assets valued US $ 161.404 billion and US $ 158.86 billion, respectively in FY 2021 and FY 2022.The company ranked 58th by Fortune 500 as of FY 2022 and 109th was the position at which the company was ranked in the Forbes Global 2000 list, in 2022.
The company operates in more than 46 countries, having a workforce of approximately 182,000 people.
Today we are going over Porter’s Five Forces Analysis of Raytheon Technologies Corporation.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis of Raytheon Technologies is used to determine the company’s competitive position reference to it’s Industry for better strategizing the companies’ operations for higher profits and less competition.
- Raytheon Technologies Business Segments and Revenue FY 2021-2022: The Company is operating through 4 Operational Reportable Segments including
Collins Aerospace Systems: This segment produce equipment for aerospace and defense industry including cabin equipment, electrified power and control systems generated US$ 18.4 billion in FY 2021 and US$ 20.6 billion in FY 2022 with adjusted operating profit US$ 1.8 billion in FY 2021 and 2.6 billion as of FY 2022.
Pratt and Whitney: This segments serves military, commercial and business aircraft industry including producing aircraft engines and power systems generated US$ 18.2 billion in FY 2021 and 20.5 billion in FY 2022.The adjusted operating profit from the same segment is of US$ 0.5 billion in FY 2021 and US$ 1.3 billion as of FY 2022.
Raytheon Missiles and Defense:This segments serves cyber services and software solutions in multiple domains with future challenges solutions provider generated US$ 15.2 billion in FY 2021 and 14.3 billion in FY 2022.The adjusted operating profit from the same segment is of US$ 1.6 billion in FY 2021 and US$ 1.3 billion as of FY 2022
Raytheon Intelligence and Space: This segments provide detection and tracking solutions with a track record of revenue generation of US$ 15.5 billion in FY 2021 and US$ 14.9 billion in FY 2022.The adjusted operating profit from the same segment is US$ 2.0 billion in FY 2021 and US$ 1.6 billion in FY 2022.
- Raytheon Technologies Revenue Geographical Distribution 2021-2022 : The geographical distribution of revenues are as follows: The65% of total sales were generated in the United States, 15% in Europe, 12% in Asia Pacific, 7% in North Africa and Middle East and 4% in Canada and others in FY 2021.
While 61% sales were generated in the United States, 17% in Europe, 12% in Asia Pacific, 5% in Middle East and North Africa and 4% in others in FY 2022.
- Boeing :Boeinggave a stiff competition to the company by generating an annual sales of US $ 62.286 billion, in 2021 while US$ 66.60 in FY 2022, with a Net recovery Loss of US $ (4.29) billion in FY 2021 and US$ (4.93) billion in FY 2022.Total assets of Boeing amounted to US $ 138.552 billion in FY 2021 while US$ 137.10 billion in FY 2022.
The company operates in more than 65 countries and have customers in approximately 150 countries .The company has a workforce of approximately 142,000 people.
- Lockheed Martin: Lockheed Martinmade an annual revenueUS $67.044 billionin FY 2021 and US$ 65.98 billion in FY 2022 with a net profit of and US $ 6.315 billion in FY 2021 and US$ 5.7 billion in FY 2021, respectively.
Total assets values at US $ 50.873 in FY 2021 and US$ 52.880 in FY 2022, respectively of the company in 2021.
Revenue Business Segmentation: Net sales of business segment of aeronautics was 41%, in 2022 with revenue generation of US$ 26.98 billion, from Space Systems US$ 11.53 billion, from Rotary Mission Systems US$ 16.14 billion and US$ 11.31 billion from Missiles and Fire Control.
US Government: The company generated sales of US $ 42.42 billion from the government of the United States in 2021.Net sales from segment in aeronautics was US $15 billion from the US government.
Capital expenditures of US $ 477 million and US $ 305 million was incurred in Aeronautics and space systems respectively, in 2021.
The company has a workforce of approximately 114,000 people.
Raytheon Technologies Threat of New Entrants
- High Capital Investment and Advancement in Technology: In order to enter the market investments of high amounts will be required for assets, if the new entrant don’t want to face any such risks then this is a discouraging factor.
In order to excel in any industry having technological advancement is necessary, with the existence of technological advancement like Smart Automation, Blockchain, Hybrid Aircraft Engines etc. in aerospace industry, only entities with advanced technology can enter the industry.
- Technological Advanced Human Capital and Raytheon Technologies Investment in Research & Development:In every industry training of workers or employees is necessary not only to ensue smooth running of operations but for the purpose of workers’ safety. Training involves expenses which can also be a discouraging factor.
Research and development is required in order to design, test and produce aircrafts, which involves huge investments, making it difficult for firms to enter the market.
The existing rivalry within the industry is challenging specially to provide advance technological solutions and innovation in design and products. The Company Raytheon Technologies spent US $ 7.2 in FY while US$ 7.1 billion in for R&D in FY 2022 in company and customer funded research and development projects.
Raytheon Technologies Bargaining Power of Suppliers
- Supplies Industry Influencer:Due to nature of product only high quality of raw materials should be used. Therefore; the company is dependent on suppliers of first and second tier in order to ensure high quality, giving the suppliers some what strong force in the industry.
- Suppliers Collaboration: The Company, has suppliers all around the world, with total of approximately 14,000 product suppliers working actively including 585 supply chain management. The company tries to maintain strong collaboration with its suppliers.
Raytheon Technologies Bargaining Power of Buyers
- Innovation and Technological Leadership:Being an end to end product and service provider and dealing in sensitive latest technological based solutions Raytheon is continuously investing in research and development for the best solutions and technological innovations. Only in FY 2022 Raytheon invested US$ 200 million in Engineering and Operations center in India.
- Customer Satisfaction – US-Government Contracts:There are a whole lot of requirements after selling aircrafts such as engineering, staff training, maintenance etc. The Raytheon customer portfolio comprises of airports and commercial and business aviation customers.
As a high end product customer satisfaction is necessary to retain market share. As per the customer satisfactory survey in the US, Boeing was ranked within the top three positions.
US Government Institution including US Air Force and Navy are also one of the biggest customers and contract providers of Raytheon Technologies .Only from AMRAAM contract Raytheon earned US$ 972 million from US Government in FY 2022.
Raytheon Technologies Threat of Substitute Products or Services
- US Aero Space Industry –US Governmental Policies and International Crises
US government is one the biggest serving segment of Raytheon Technologies so any governmental policies or any international crises which will impact the US Governmental policies will impact the products and services revenues of Raytheon Technologies.
- Russia Ukraine Invasion – Cease of Operation in Russia
Due to Russia Ukraine invasion Raytheon Technologies ceased their operations and sales in Russia which caused disposition charges of US$ 69 million for Collins Aerospace segment and US$ 42 million for Raytheon Missiles and Defense. Any further international crises will further impact the revenues and operations of Raytheon Technologies.
- 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
- Raytheon Technologies, Global 2000 Forbes 2022 List
- Raytheon Technologies, (July 6, 2022) 100 years of era-defining innovation. Available at Raytheon Technologies
- Raytheon Technologies Corporation’s net sales from FY 2008 to FY 2021(Apr 13, 2022)| Available at Statista
- Raytheon Technologies Corporation’s net income from FY 2008 to FY 2021(Oct 7, 2022)| Available at Statista
- Raytheon Technologies Corporation’s operating profit in FY 2021, by segment(Feb 3, 2023)| Available at Statista
- Raytheon Technologies Corporation – statistics & facts(Sep 22, 2022)| Available at Statista
- Raytheon Technologies Corporation’s net sales in FY 2021, by segment(Feb 3, 2023)| Available at Statista
- Basic Information about Raytheon Technologies |Available at Forbes
- Forbes Global List 2000|Available at Forbes
- Number of Boeing employees from 2002 to 2021(Feb 2, 2022)| Available at Statista
- Boeing’s earnings/ losses from operations from 2012 to 2021(Dec 12, 2022)| Available at Statista
- Boeing’s global revenue in FY 2021, by region or country(Feb 6, 2023)| Available at Statista
- Airbus and Boeing – statistics & facts(Sep 6, 2022)| Available at Statista
- Boeing’s worldwide revenue from FY 2007 to FY 2021(Feb 3, 2023)| Available at Statista
- Number of employees at defense technology supplier Lockheed Martin from 2000 to 2021(Jan 26, 2023)| Available at Statista
- Net sales of defense technology supplier Lockheed Martin to the U.S. Government from 2000 to 2021(Jan 26, 2023)| Available at Statista
- Distribution of net sales of defense technology supplier Lockheed Martin in 2022, by product segment(Jan 26, 2023) | Available at Statista
- Capital expenditures of defense technology supplier Lockheed Martin from 2010 to 2021, by business segment(Jan 26, 2023) | Available at Statista
- Revenue of the defense technology supplier Lockheed Martin from 2000 to 2022(Jan 26, 2023) | Available at Statista
- Revenue of defense technology supplier Lockheed Martin by product segment from 2010 to 2022(Jan 26, 2023) | Available at Statista
- Lockheed Martin – Statistics & Facts(Aug 5, 2022)| Available at Statista