Swot Analysis of Lockheed Martin

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Lockheed Martin Corp.

Lockheed Martin Corporation is an advanced technology firm that is on the cutting edge of research in aeronautics, space, systems and IT technologies. The product of a 1995 merger between Lockheed Corporation and Martin Marietta Corporation, 80% of Lockheed Martin’s market is the U.S. Government through the Department of Defense and intelligence, civilian and Homeland Security organizations. With 2010 sales of $45.8 billion and a $78.2 billion backlog, Lockheed Martin ranked 54th on the Fortune 500 list.

Customer Base: As a global security and information technology company, the majority of Lockheed Martin's business is with the U.S. Department of Defense and the U.S. federal government agencies. In fact, Lockheed Martin is the largest provider of IT services, systems integration, and training to the U.S. Government. The remaining portion of Lockheed Martin's business is comprised of international government and some commercial sales of our products, services and platforms.

Organization: Lockheed Martin's operating units are organized into broad business areas.

Aeronautics, with approximately $13.3 billion in 2010 sales, includes tactical aircraft, airlift, and aeronautical research and development lines of business.

Electronic Systems, with approximately $14.3 billion in 2010 sales, includes missiles and fire control, naval systems, platform integration, simulation and training and energy programs lines of business.

Information Systems & Global Solutions (IS&GS), with approximately $9.9 billion in 2010 sales, includes C4I, federal services, government and commercial IT solutions.

Space Systems, with approximately $8.2 billion in 2010 sales, includes space launch, commercial satellites, government satellites, and strategic missiles lines of business.

Strengths & Weaknesses
A. Lockheed Martin has a very strong relationship with the U.S. defense agencies. As the largest government contractor, it has produced military mainstays like the F-16 and A-10. It also is poised to carry U.S. airpower into the future with the F-117 Nighthawk and F-22 Raptor, both of which are stealth aircraft. Lockheed Martin has also reached into the Navy’s realm 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. With billions of defense dollars supporting endeavors, Lockheed Martin has a very willing, very rich customer base.

B. A $78.2 billion backlog primarily in fighter jets, Lockheed Martin is guaranteed growth and sustainability for two years, even if they never sought another contract. This backlog acts as a safety net for future endeavors, investments and research & development costs. 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 2007, it increased profits by 11%. This increased to 20% in 2008 and another 11% increase in 2009. At the same time, debt has gone down while returns on equity and net income have increased. The financial reports show a strong company that is improving each year. C. The U.S. Department of Defense and U.S. intelligence agencies comprised of approximately $45.8 billion Lockheed Martin’s sales in 2010 (their most recently published year). At approximately 84%, this is by far its largest group of customers. Approximately 60% of net sales were made to the Department of Defense and, with 24% attributable to non-DOD agencies. Unfortunately, this creates a major dependence on the U.S. Government in order to survive. Without diversification of customers Lockheed Martin would be in a financial bind, if it had more rival companies. In the company’s 2010 Annual report it stated: “In years when the US Government does not complete its budget process before the end of its fiscal...
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