Lockheed Martin SWOT Analysis / Matrix

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SWOT analysis is a strategic planning tool that can be used by Lockheed Martin managers to do a situational analysis of the firm . It is a useful technique to understand the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Lockheed Martin is facing in its current business environment.

The Lockheed Martin is one of the leading companies in its industry. Lockheed Martin maintains its prominent position in market by critically analyzing and reviewing the SWOT analysis.  SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the company such as – marketing, finance, operations, management information systems and strategic planning.

The SWOT Analysis framework helps an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Lockheed Martin to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
Lockheed Martin swot analysis / matrix

SWOT Matrix Strategies Objective

The central purpose of SWOT matrix is to identify the strategies that a firm can utilize to exploit external opportunities, counter threats, and build on & protect Lockheed Martin strengths, and eradicate its weaknesses.

Step by Step Guide to Lockheed Martin SWOT Analysis

Strengths of Lockheed Martin – Internal Strategic Factors

As one of the leading companies in its industry, Lockheed Martin has numerous strengths that help it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Lockheed Martin are –

  • Automation of activities brought consistency of quality to Lockheed Martin products and has enabled the company to scale up and scale down based on the demand conditions in the market.
  • Strong dealer community – It has built a culture among distributor & dealers where the dealers not only promote company’s products but also invest in training the sales team to explain to the customer how he/she can extract the maximum benefits out of the products.
  • Strong Free Cash Flow – Lockheed Martin has strong free cash flows that provide resources in the hand of the company to expand into new projects.
  • Good Returns on Capital Expenditure – Lockheed Martin is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
  • Successful track record of developing new products – product innovation.
  • Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
  • Highly successful at Go To Market strategies for its products.
  • Highly skilled workforce through successful training and learning programs. Lockheed Martin is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.

Weakness of Lockheed Martin – Internal Strategic Factors

Weakness are the areas where Lockheed Martin can improve upon. Strategy is about making choices and weakness are the areas where a firm can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

  • Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of Lockheed Martin
  • Not highly successful at integrating firms with different work culture. As mentioned earlier even though Lockheed Martin is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
  • The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.
  • Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its competitors. One of the reason why the days inventory is high compare to its competitors is that Lockheed Martin is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
  • Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Lockheed Martin needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.
  • Investment in Research and Development is below the fastest growing players in the industry. Even though Lockheed Martin is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.
  • The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Lockheed Martin has to build internal feedback mechanism directly from sales team on ground to counter these challenges.

Opportunities for Lockheed Martin – External Strategic Factors

  • Government green drive also opens an opportunity for procurement of Lockheed Martin products by the state as well as federal government contractors.
  • Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Lockheed Martin in other product categories.
  • Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Lockheed Martin an opportunity to enter a new emerging market.
  • Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Lockheed Martin.
  • New trends in the consumer behavior can open up new market for the Lockheed Martin . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
  • Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Lockheed Martin’s products thus providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.
  • The market development will lead to dilution of competitor’s advantage and enable Lockheed Martin to increase its competitiveness compare to the other competitors.
  • Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines.

Threats Lockheed Martin Facing - External Strategic Factors

  • The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.
  • Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
  • Rising raw material can pose a threat to the Lockheed Martin profitability.
  • As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.
  • Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Lockheed Martin   in those markets.
  • Imitation of the counterfeit and low quality product is also a threat to Lockheed Martin’s product especially in the emerging markets and low income markets.
  • Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Lockheed Martin
  • Liability laws in different countries are different and Lockheed Martin may be exposed to various liability claims given change in policies in those markets.

Limitations of SWOT Analysis for Lockheed Martin

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

  • Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
  • SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
  • The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Lockheed Martin
  • SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
  • SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

Weighted SWOT Analysis of Lockheed Martin

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Lockheed Martin managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of Lockheed Martin

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

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Example of Weighted SWOT Analysis

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SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

  • M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
  • A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
  • O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
  • L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
  • R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)