Environmental Analysis Of Lockheed Martin

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Each company or organization belongs to a market industry that includes three components, the remote environment, the industry environment and the operating environment. These factors impact the decisions that organizations make in order to provide the best services and products while maintaining a high profit for the company. Lockheed Martin is a multinational aerospace manufacturer and advanced technology company, formed in 1995 by the merger of Lockheed Corporation with Martin Marietta (Lockheed Martin, 2008). Lockheed Martin is affected by the macroeconomic environment, the economic decisions that the organization itself makes and the industry environment. Organization Industry Lockheed Martin is an organization that heavily relies on its defense contracts in order to generate revenue. In 2005, 95% of Lockheed Martin’s revenue came from the US Department of Defense, other US Federal government agencies and foreign military customers (Defense News, 2007). Lockheed Martin earns this revenue by winning government contracts. As previously noted, Lockheed Martin has a large customer base with the US Department of Defense. The company is the largest provider of IT services, systems integration, and training to the government (Lockheed Martin, 2008). Other customers that provide revenue for Lockheed Martin are international governments and some commercial sales of products and services (Lockheed Martin, 2008). The broad business areas covered by Lockheed Martin are Aeronautics, including tactical aircraft, airlift, and aeronautical research and development, Space Systems, including space launch, commercial satellites, government satellites and strategic missiles, and Systems and IT Group, including missiles and fire control, naval systems, platform integration, C4I, federal services, energy programs, government and commercial IT and aeronautical/aerospace services. In 2007, these areas brought in sales, $12.3 billion, $8.2 billion, and $21.4 billion, respectively (Lockheed Martin, 2008). This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.

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