Environmental Scan
MGT/498

Environmental Advantage
One of the fundamental requirements for a company to succeed is to understand both the internal and external environments. The companies must understand these environments and apply the knowledge to a strategy that will give the company a competitive advantage. The competitive advantage must be measured to fully understand how the strategy is being implemented and to what extent the strategy is creating a competitive advantage. Northrop Grumman (NG) uses environmental scanning to understand the market environment. This helps establish a strategy that will hopefully create a competitive advantage.
Internal and external environmental scan
Northrop Grumman’s internal environment is very strong. The company has positioned itself well to capitalize on the emerging trends in the national defense market place. Northrop has developed new technologies and internal infrastructure to sustain new business in the new technologies departments. NG is also strong in personnel, although there is a troubling trend emerging. NG has a long history of dedicated workers but has failed to retain or attract new talent. There is a growing gap between the experienced knowhow and the new employees. NG has a large gap in the middle of the workforce. The majority of the work force is either five years from retirement or has less than five years with the company. Therefore the “local knowledge” that is essential for continuing seamless operations as the older generation moves on is failing to be passed down to the newer generation of employees. NG has recognized this problem and has created work groups within most sectors of the company that pair newer employees with seasoned veterans in an attempt to create a better unity and work environment as well as pass down the knowledge that the younger generation will require to continue the company’s upward path once the older generation has moved on.
Externally, NG faces some tough challenges. The company is positioned will to attract new business in some aerospace defense aspects but not all. The main competitors in the aerospace defense market are Boeing and Lockheed Martin. The company has a good portfolio of work currently so there is no major concern in this particular area but NG has lost a few key contracts of late due to the lack of ability in certain areas of aerospace defense. On major reason this is, is because NG has been focusing its efforts on other areas of defense contracting, particularly space and information systems. Many people only see NG as and aerospace business but the company has strong abilities in the space department. Also the organization has recognized its knowledge in the information systems field, which it gained by chance through the development of other aerospace programs. NG has recognized a demand in this particular market and has ramped up its infrastructure and ability level to accommodate this new demand whereas most other traditional aerospace companies, such as Boeing and Lockheed Martin have not. Additionally NG is the largest ship building company in the United States and is responsible for the construction of all Navy ships currently being built.
Completive advantage
In the aerospace field NG has created an advantage with its stealth technology. NG capability and development of stealth technologies are second to none in the world. Although other aerospace companies have closed the gap somewhat and do produce products with stealth technologies NG is the industry leader. The development and production of the B-2 Stealth Bomber set the bench mark in stealth technology. NG has not rested on this advantage and has continued to test and develop new stealth technologies which have helped to maintain a competitive advantage within the aerospace defense market.
Information systems and information security is a fairly new market to NG, but that hasn’t stopped the corporation from separating itself from the other industry competitors. Specifically NG has used its development of secure communication systems to advance technologies in other fields outside of aerospace in which they were originally intended. This diversification has opened the door into a completely new market for NG. The goal behind this strategy is to diversify using preexisting knowledge. Inherently the company will have to develop new applications and tweak some existing knowledge but the baseline technology has already been developed and the skill is already in place within the company. This also creates a new market for the company to compete in which diversifies the company’s portfolio. Making the company more stable for long term growth because if one sector, say aerospace, is in a bathtub as far as acquisitions and spending then the company has other fields in which to pull from or market itself.
Monitoring competitive advantage
To monitor competitive advantage and new strategies, NG can look to a few resources. Firstly, most government contracts are offered to each of the aerospace company. NG can track each of these contracts by their requirements and how those requirements fit into NG wheelhouse. This can help NG to track if they are positioned correctly per the trends in the aerospace market.
Secondly the company can continue to develop new technologies and then present them to the customers and monitor which and at what volume is the customer interested. NG believes they understand where their competitive advantages lie; therefore they will continue to develop technologies within those advantages. If these new technologies are not selling then NG will realize that the market is shifting away from their competitive advantage and can adjust to the new trends by monitoring what the requirements are within the new contracts coming from the pentagon.
The effectiveness of the monitoring systems is fairly good. By tracking contracting trends and understanding the global requirements of its customer, NG has its thumb on the pulse of the market. This has helped NG remain one of the industry leaders in many fields, including stealth development. NG can understand and predict where to assign its assets by monitoring the defense contracts and by knowing which companies are getting what contracts.
Conclusion
Northrop Grumman has always been very aware of its internal and external strengths and weaknesses. This is what has sustained them through a time when most all aerospace companies either folded or were bought out by larger firms. Today NG is one of three major aerospace defense contractors. NG understands its market advantages and defiantly plays the game in their favor. It also help that NG is the leading developer in technologies the customer is very interested in. This competitive advantage what created by NG because the organization had positioned itself to be flexible and adapt to the market trends.

References
Wheelen, T. L., & Hunger, J. D. (2008). Concepts in Strategic Management and Business Policy (11th ed.). Upper Saddle River, NJ: Prentice Hall.