Organizational Strategy and Objectives
I. Strategy Overview
Strategic Planning—the process of developing a plan to achieve organizational purpose—is a management tool used to focus a workforce’s energy. Strategic planning ensures that the workforce achieves an organization’s mission. It is used by large organizations to increase the chances for long-term growth and profitability (Auka, 2016). Lockheed Martin’s strategy is well-aligned with the organization’s mission, vision, and values, reviewed carefully by a well-qualified team, and regularly measured against the appropriate objectives. This has positioned the corporation for success.
Like most large organizations, Lockheed Martin deploys strategy to make certain its workforce completes
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the organization’s objectives. Lockheed Martin has a number of strategic plans. In the 2017 Proxy Statement, it was reported that Lockheed Martin is continuing to reshape the organization’s portfolio. Most notably, during 2016, Lockheed Martin acquired Sikorsky Aircraft Corporation and integrated the business into a newly realigned and renamed Rotary and Mission System’s business area. In addition, Lockheed Martin divested the Information Systems & Global Solutions (IS&GS) business area. (Hewson, 2017) The Sikorsky acquisition and IS&GS divestiture supported the Corporation’s mission to expand international sales. Sikorsky has a number of international customers. Therefore, acquiring Sikorsky helped Lockheed Martin to increase the number of international sales. IS&GS, on the other hand, mainly provided information technology and services for the United States government. Selling IS&GS helped reduce the number of domestic sales and the dependence on the United Statement government for revenue. Lockheed Martin provided further insight into the organization’s strategy in the 2016 Annual Report. As outlined in the 2016 Annual Report, Lockheed Martin focused on meeting or exceeding customer’s needs and reducing costs. As explained in the 2016 Annual Report, Lockheed Martin successfully reached multiple, critical production milestones and delivered a record number of F-35 aircraft. In addition, Lockheed Martin collaborated with the United States Department of Defense to announce two initiatives that will reduce F-35 production and sustainment costs—the Blueprint for Affordability for Production and the Sustainment Cost Reductions Initiative. (Hewson, 2016) Another key strategy is Lockheed Martin’s commitment to innovation. As part of the innovation strategy Lockheed Martin continued to focus on the customers’ long-term requirements and the potential role of emerging technology. This resulted in the organization’s increased concentration on hypersonics, directed energy, and autonomy. In addition, expanding the capabilities of existing products. II. Strategy Development The organization’s strategy is developed by Lockheed Martin management and then reviewed and revised, as necessary, by the Board of Directors.
Lockheed Martin believes governance is integral to the success of the organization. As a result, the Board of Directors is comprised of a highly qualified and diverse team. The Board of Directors’ primary role is to provide management oversight and represent the interests of stockholders. One way the Board of Directors provides oversight is reviewing management’s corporate strategy. In addition to reviewing corporate strategy, the board also has the opportunity recommend strategic decisions such as exiting from and entry into lines of business, material acquisitions, joint ventures, investments, and financing transactions. The additional review and approval of Lockheed Martin’s organizational strategy and objectives serve to ensure the organization’s long-term …show more content…
success. III. Strategy Analysis Thus far, the organization has been successful in achieving is organizational objectives as demonstrated by a number of key performance indicators. For instance, net sales increased 17 percent from $40.5 billion in 2015 to $47.2 billion in 2016. Net earnings also increased from $3.1 billion in 2015 to $3.8 billion in 2016. And, cash from operations also increased from $5.1 billion to $5.2 billion. The United States Air Force declared Initial Operational Capability for the F-35A, which is a significant achievement for the program. The organization was awarded a $1.45 billion contract for the production and delivery of Patriot Advanced Capability-3 (PAC-3) missiles and interceptors for the United States Army and international allies. In addition, Lockheed Martin expanded its international business so that last year it represented 27% of sales. To ensure the successful implementation of the Lockheed Martin’s mission, vision, values, and goals, the organization crafts a strategy with highly-qualified professionals. In addition, the organization monitors its results by identifying and reporting on associated measurable objectives. IV. Strategy Types From Lockheed Martin’s Annual Report, it is clear that the organization has at least three different strategy types—global, corporate, and business-level. In the Annual Report, the organization make it clear that it current operates internationally and are looking to increase international sales. The Annual Report also outlines several different corporate strategies—such as the recent acquisition of Sikorsky (which entered the organization into helicopter realm of aeronautics) and the divestiture of IS&GS. Finally, the annual report also outlines the different business-level strategies that are specific to the company’s different product lines—Aeronautics, Missile and Fire Control, and Rotary Missions and Systems, and Space Systems. V. Sources of Competitive Advantage and Relative Value Lockheed Martin has several sources of competitive advantage. As explained in the 2015 Annual Report, those competitive advantages include: the value of the corporation’s products and services to the customer; technical and management capability; the ability to develop and implement complex, integrated system architectures; the corporation’s demonstrated ability to execute and perform against contract requirements; and the corporation’s ability to provide timely solutions. One can only surmise that additional competitive advantage also lies with the innovation of the corporation’s workforce. All of these things are extremely valuable. Especially, the workforce because without the workforce their would be no innovation or manpower to provide the corporation’s various products and services. VI. Core Competencies The corporation’s core competencies are the value of their products and services and the ability to provide timely solutions.
Given the organization’s financial success—as described in its most recent Proxy Statements—it is clear that Lockheed Martin has utilized its core competencies to achieve competitive advantage.
VII. Organizational Size and Structure
Lockheed Martin’s size and structure has changed considerably over the past five years. The changes have enabled Lockheed Martin to achieve the organization’s strategic objectives.
a. Size
Lockheed Martin is a large corporation with nearly 100,000 employees. Given the breadth and depth of the organization’s portfolio of products and services, it is necessary for Lockheed Martin to have a large workforce.
Like most companies, Lockheed Martin is greatly impacted by the United States economy. Over the years, economic pressures have forced the corporation to become more affordable so that it can provide more value for the customer (primarily the United States Department of Defense and other United States governmental agencies) and the United States tax payers. Consequently, Lockheed Martin has had to carefully review employee headcount and make changes to ensure the corporation is the right size. According to the 2015 Annual Report, Lockheed Martin had 126,000 employees. However, the website indicates that Lockheed Martin currently has 97,000 employees. Right-sizing the organization, has enabled Lockheed Martin to
provide cost-effective solutions for the United States government and tax payers. b. Structure Lockheed Martin is a large organization with a workforce of over 97,000 employees. In order to reduce bureaucracy and increase efficiency, the corporation is comprised into different business areas. The business areas are segmented by the different products and services they provide. The business areas include: Aeronautics, Missiles & Fire Control, Information Systems and Global Solutions, and Rotary, Missions, & Sensors. Lockheed Martin’s organizational structure positions the corporation to achieve its mission, vision, values, and goals in the following manner. As mentioned previously, Lockheed Martin divested Information Systems and Global Solution (IS&GS)—one of the organization’s business units. The decision to downsize was likely two-fold—IS&GS’s inability to win the necessary contracts in order to remain profitable and to increase the Lockheed Martin’s international sales. IS&GS primarily provided information technology and other services to the United States government. Faced with budget constraints, the United States government primarily awarded information technology and service contracts to the lowest bidder. This placed Lockheed Martin at a considerable disadvantage because of the organization’s size and resulting overhead costs. Continued loss of contracts would threaten Lockheed Martin’s profitability. In addition to resolving profit concerns, the sale of IS&GS also helped to increase Lockheed Martin’s international size and reduce its reliance on the United Statement government for business. Around the same time as the IS&GS divestiture, Lockheed Martin acquired Sikorsky Aircraft from United Technologies Corporation. With the acquisition of Sikorsky Aircraft, Lockheed Martine expanded its portfolio to include helicopters and innovative helicopter solutions. Given Lockheed Martin’s prior expertise in other aircraft and aircraft sustainment and its existing customers, the acquisition of Sikorsky Aircraft to enter into the helicopter industry made perfect sense. In addition, given Sikorsky’s international customer base it gave Lockheed Martin the opportunity to increase international sales and, thereby, reduce dependency on the United States Department of Defense even further. c. Conclusion In order to achieve success an organization must carefully consider its size and organizational structure. It is clear that Lockheed Martin has done just this. Lockheed Martin’s size and organizational structure put the corporation in a position to ensure the organization can fulfill its mission, vision, goals and objectives.
The defense of our nation and its allies across the globe is essential to the success of the world we live in. The methods in which this defense takes place varies in many different ways, in air, on land, and at sea. Within our nation lies some of the largest defense organizations on the face of the planet, most, if not all, of which strive to protect the United States of America in all arenas. One of these organizations is Northrop Grumman. Northrop Grumman is one of the largest global aerospace and defense technology companies in the world. The company employs over 68,000 employees worldwide, and was named as the fourth-largest defense contractor in the world in 2016 (Forbes, 2016). It grossed over $23.526 billion in 2015. Northrop Grumman
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).
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