Phoenix MGT 426 Selecting a Company
Working in business management means taking on responsibility to lead your organization in a variety of situations. Part of that responsibility is understanding where an organization has been and where its going. In this course, you put yourself in the shoes of a manager and use resources to make decisions on where an organization is heading in respect to business needs, organizational structure, leadership strategies, and change management. Some of the information needed may be easy to locate, but other information may take time and effort to find. Some may even need assumptions based on research. These research and strategizing skills will be useful in your business management career.
Select a company and learn about its history. This will prepare you for your Wk 2 Analysis.
THE COMPANY I CHOOSE IS NORTHMAN GUNTHROP.
Note: Some reports are more recent than others. Its in your best interest to find a company with a recent (within 2 years) report.
Select 1 global company from Business Source Complete: SWOT Analyses to use for the next 5 weeks (this will sometimes be referred to as your company).
Attached is the BUSINESS SOURCE COMPLETE SWOT
Create a chart or outline that conveys the following information:
Name of company
Industry
Brief history of company
At least 3 milestones from the companys history
3 resources (in addition to Business Source Complete) where you can locate company information in future weeks. This may include company websites, current employees, journals, etc.
Define 1 new unique business opportunity the company can do to increase their competitive advantage.
Identify a function of management that is needed for this opportunity.
COMPANY PROFILE
Northrop Grumman
Corporation
REFERENCE CODE: 9D3EC0C0-911A-4E88-9064-4359FF254A52
PUBLICATION DATE: 26 Jan 2020
www.marketline.com
COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED
A Progressive Digital Media business
http://www.marketlineinfo.com/
Northrop Grumman Corporation
TABLE OF CONTENTS
Northrop Grumman Corporation
MarketLine
Page 2
TABLE OF CONTENTS
Company Overview …………………………………………………………………………………………..3
Key Facts………………………………………………………………………………………………………….3
SWOT Analysis …………………………………………………………………………………………………4
Northrop Grumman Corporation
Company Overview
Northrop Grumman Corporation
MarketLine
Page 3
Company Overview
COMPANY OVERVIEW
Northrop Grumman Corporation (Northrop or ‘the company’) is a designer, developer, and manufacturer
of security and technology products and solutions.It also designs, and develops solutions for electronics,
and information systems, and aerospace industries. The company offers a portfolio of capabilities and
technologies that enables it to deliver products, systems and solutions for applications that range from
undersea to outer space and into cyberspace. It provides products, systems and solutions in autonomous
systems; cyber; command, control, communications and computers, intelligence, surveillance, and
reconnaissance (C4ISR); strike; and logistics and modernization. Through subsidiaries, the company
operates in the US and other countries. The company is headquartered in Falls Church, Virginia.
The company reported revenues of (US Dollars) US$30,095 million for the fiscal year ended December
2018 (FY2018), an increase of 15.7% over FY2017. In FY2018, the companys operating margin was
12.6%, compared to an operating margin of 12.4% in FY2017. In FY2018, the company recorded a net
margin of 10.7%, compared to a net margin of 11% in FY2017.
The company reported revenues of US$8,456.0 million for the second quarter ended June 2019, an
increase of 3.3% over the previous quarter.
Key Facts
KEY FACTS
Head Office Northrop Grumman Corporation
2980 Fairview Park Drive
Falls Church
Virginia
Falls Church
Virginia
USA
Phone 1 703 2802900
Fax
Web Address www.northropgrumman.com
Revenue / turnover (USD Mn) 30,095.0
Financial Year End December
Employees 85,000
New York Stock Exchange Ticker NOC
Northrop Grumman Corporation
SWOT Analysis
Northrop Grumman Corporation
MarketLine
Page 4
SWOT Analysis
SWOT ANALYSIS
Northrop Grumman Corporation (Northrop or ‘the company’) is a global security company. Strong focus
on innovation and development, and strategically balanced portfolio of products and revenue streams are
the companys major strengths, even as considerable underfunded pension, medical, and life benefits
could exert negative pressure on liquidity position, and high dependence on a single customer amplifies
business risks remain causes for concern. Increase in cyber security spending worldwide, global
aerospace and defense market, new contracts and agreements are likely to offer growth opportunities for
the company. However, stringent environmental and regulatory obligations for its nuclear-related
operations could adversely affect financial position, intense competition from well-established firms may
negatively impact operations and financial condition, and changing technology could affect its business
operations.
Strength
Strategically balanced portfolio of products and
revenue streams
Strong focus on innovation and development
Weakness
Considerable underfunded pension, medical, and life
benefits could exert negative pressure on liquidity
position
High dependence on a single customer amplifies
business risks
Opportunity
Global aerospace and defense market
New contracts and agreements
Increase in cyber security spending worldwide
Threat
Stringent environmental and regulatory obligations for
its nuclear-related operations could adversely affect
financial position
Intense competition from well-established firms may
negatively impact operations and financial condition
Changing technology
Strength
Strategically balanced portfolio of products and revenue streams
Northrop has a diversified product portfolio. The company operates through fourbusiness segments,
including Aerospace Systems, Mission Systems, Innovation Systems, and Technology Services. The
Aerospace Systems segment designs, develops, integrates and produces manned aircraft, autonomous
systems, spacecraft, high-energy laser systems, microelectronics and other systems/subsystems. The
Mission Systems segment is engaged in advanced end-to-end mission solutions and multifunction
systems for DoD, intelligence community, international, federal civil and commercial customers. The
Technology Services segment is a provider of logistics solutions supporting the full life cycle of platforms
and systems for global defense and federal-civil customers.ItsInnovation Systems develops, designs, and
manufactures armament and space systems, and flights for commercial customers and civil government.
Northrop Grumman Corporation
SWOT Analysis
Northrop Grumman Corporation
MarketLine
Page 5
Under the segment, its major products include defense electronics, missile products, armament systems
and ammunition, precision weapons, satellites and associated space components. In FY2018, its
Aerospace Systems segment accounted for 40.4% of the companys total revenue followed by Mission
Systems with 36.2%, Technology Services with 13.3%,andInnovation Systems with 10.1%. Strategically
balanced product portfolio not only shields against unfavorable forces in a specific market by dispersing
its business risks, but also enables it to benefit from opportunities available across various industries.
Additionally, well balanced revenue streams reduce the business risks and enable the company to seize
opportunities in new as well as existing markets.
Strong focus on innovation and development
Northrop has a strong focus on innovation and development, which enhance its existing products and
services, and develop new products and services to meet its customers’ changing needs and
requirements, and address new market opportunities. During FY2018, the company spent US$764 million
on its innovation and development activities. Its innovation and development activities allow to develop
existing technologies including electromagnetic, microelectronic, aeronautical, and information
technologies. Besides that, it also focuses to develop several areas including data science and data
analytics, cybersecurity solutions,sensor date fusion technology, and embedded system software. The
company also made collaboration with several research institutes and universities to develop homeland
and defense security. Hence, Northrop’s strong focus on R&D enables it to uphold the technological
leadership in most of its product segments. In addition, it allows the company to develop innovative
products which in turn drives its sales volumes.
Weakness
Considerable underfunded pension, medical, and life benefits could exert negative pressure on liquidity
position
The company offers pension and medical and life benefits to its employees. A substantial portion of
Northrop’s current and retired employee population is covered by pension and postretirement benefit
plans. During FY2018, the company’s projected pension benefit obligation was US$31,967 million, as
compared to fair value of planned assets of US$27,226 million. This resulted in an underfunded status of
US$4,741 million. Similarly, the projected medical and life benefit obligation in FY2018 was US$2,110
million, as compared to fair value of planned assets of US$1,338 million. This resulted in an underfunded
status of US$772million The costs of pension and medical expenses associated with the company’s
retirement benefit plans are dependent upon the company’s various assumptions including estimates of
rates of return on benefit related assets, discount rates for future payment obligations, rates of future cost
growth and trends for future costs. In addition, these obligations could increase significantly due to a
reduction in funded status as a result of a variety of factors, including weak performance of financial
markets, declining interest rates, investment decisions that do not achieve adequate returns, and
investment risk inherent in the company’s investment portfolio. Thus, unfunded pension obligations could
force Northrop to make regular cash contributions to bridge the gap between pension assets and
liabilities, thereby pressurizing the liquidity position of the company.
High dependence on a single customer amplifies business risks
Northrop Grumman Corporation
SWOT Analysis
Northrop Grumman Corporation
MarketLine
Page 6
Northrop is depended on a single customer for majority of its revenue. The company is a supplier, either
directly or as a subcontractor or team member, to the US Government and its agencies. For instance,
each of the company’s segments derives substantial revenue from the US Government. Sales to the US
Government amounted to 82%, 85%, and 84% of total sales for the years ended December 2018, 2017
and 2016, respectively. Overdependence on the US Government exposes the company to the defense
approvals, congressional appropriations and numerous regulations in the US. In addition, termination of a
contract due to any unforeseen circumstances by the US Government may expose the company to
material liability and could have a material adverse effect on Northrop’s ability to compete for other
contracts.
Opportunity
Global aerospace and defense market
Growth in the global aerospace and defense sector could provide abundant growth opportunities to the
company. According to in-house research, the global defense market is expected to reach US$1,514.2
billion by 2023 from US$1,273 billion in 2018, growing at a CAGR of 3.5%. The US dominates the market
with a share of 42.6% in 2018, followed by Asia-Pacific (24.9%) and Europe (24.4%), Middle East (4.2%),
and Rest of the World (3.8%). The civil aerospace segment accounted for 50.1% of the total market in
2018, followed by systems and ordnance (31.3%), military aircraft (10.3%), naval vessels (6.7%), and
military vehicles (1.7%).
New contracts and agreements
The company took various strategic initiatives to drive its growth. These initiatives are expected to
strengthen the companys operations and increase its returns. For instance, in August 2019, the company
received a contract of US$482 million from the US Army for common infrared countermeasure systems
and support services. In the same month of 2019, the company along with BAE Systems received a
contract from the US Army to offer infrared countermeasures systems and support. In July 2019, the
company was awarded a contract worth US$167 million by the US Navy for the AGM-88E advanced anti-
radiation guided missile. In the same month of July 2019, the company received a contract of US$33
million to provide support for the MQ-4C Triton unmanned aircraft system. In July 2019, the company
received a contract of US$44 million from the US Air Force for upgradation of the electronic attack pod
program.
Increase in cyber security spending worldwide
The growing vulnerability of IT and communication networks to hacking, increasing threats of terrorist
attacks, and the increasing need to secure maritime and offshore installations necessitate investments in
cybersecurity globally. According to in-house research, the worldwide cybersecurity market is expected to
increase from US$12.5 billion in 2018 to US$17.8 billion by 2028, growing at a CAGR of 3.6%. Increased
expenditure on cybersecurity in major markets such as the US, and countries in Europe, Asia-Pacific and
the Middle East also aids growth. North America is expected to account for 55% of the total market,
followed by Asia-Pacific (22%), Europe (11%), the Middle East (8%), and Latin America and Africa
Northrop Grumman Corporation
SWOT Analysis
Northrop Grumman Corporation
MarketLine
Page 7
together (4%). The cybersecurity market comprises four segments: network security, data security,
identity and access, and cloud security. The network security segment is projected to account for 36% of
the market, followed by data security (27%), identity and access segments (21%) and cloud security
(16%) during the forecast period.
Threat
Stringent environmental and regulatory obligations for its nuclear-related operations could adversely
affect financial position
The company’s nuclear-related operations subject it to various risks, including potential liabilities relating
to harmful effects on the environment and human health that may result from nuclear-related operations
and the storage, handling and disposal of radioactive materials. Northrop also subject to reputational
harm and potential liabilities arising out of a nuclear incident, whether or not it is within it’s the company’s
control. The U.S. Government and prime contractors provide certain indemnity protection under certain of
the company’s contracts pursuant to, or in connection with, Public Law 85-804 and the Price-Anderson
Nuclear Industries Indemnity Act for certain nuclear-related risks. If there was a nuclear incident and that
indemnity protection was not available to cover Northrop’s losses and liabilities, it could have a material
adverse effect on the company’s financial position, results of operations, or cash flows.
Intense competition from well-established firms may negatively impact operations and financial condition
The company operates in highly competitive markets. Northrop offers a portfolio of capabilities and
technologies that enables it to deliver products, systems and solutions for applications that range from
undersea to outer space and into cyberspace. The product differentiation is maintained across these
markets based on the competitive factors such as technical superiority, reputation, price, past
performance, and delivery schedules. The company competes with a number of companies in the US and
international including Boeing, BAE Systems, Boeing, Booz Allen Hamilton, General Dynamics, Harris,
L3Harris Technologies, Inc, Leidos, Leonardo, Lockheed Martin, Raytheon and Thales. Some of these
competitors have stronger engineering, manufacturing and marketing capabilities than Northrop. Thus,
strong competition could negatively impact Northrop’s operations and its financial condition.
Changing technology
The company operates in a highly competitive market that is subject to rapid technological changes.
Introduction of products using new technologies or the adoption of new industry standards will make
existing products or products under development obsolete or unmarketable. In this scenario, to compete
effectively, the company has to continuously innovate and introduce new products that gain market
acceptance. Unless the company understands the customers’ requirements and adapts to emerging
technologies in the market and introduces new products and solutions, its business could be affected.
Copyright of Northrop Grumman Corporation SWOT Analysis is the property of MarketLine,
a Progressive Digital Media business and its content may not be copied or emailed to multiple
sites or posted to a listserv without the copyright holder’s express written permission.
However, users may print, download, or email articles for individual use.
