Porter’s Five Forces Analysis Lockheed Martin’s recent financial performance suggests that the organization has strategically navigated the Aerospace and Defense Industry. The corporation’s strategy—infiltrating its core competencies in its activity systems and simultaneously differentiating itself from its competitors—propelled Lockheed Martin’s achievements. Nevertheless, organizations that sustain long-term profitability, analyze all five competitive forces—customers, suppliers, aspiring entrants, and substitutions (Porter, 2008). In addition to considering existing competitors, Lockheed Martin must assess the risk that a new competitor may invade the market and capture their market share. New entrants bring new capacity and increase …show more content…
For one thing, aerospace and defensive organizations require colossal capital resources. The time, expense, human resources, and risk required to develop innovative defense systems are intolerable to most organizations. Additionally, given the nature of the products offered and customers served, the industry is highly regulated. Violations of manufacturing standards, labor recording practices, invoicing, supplier relations, information protection, and customer relations (to name a few) may subject the contractor to in fines, disbarment, and incarceration. In fact, the United States government must approve sales to any other customers. That combined with the fact, that the United States government is the industry’s largest customer and prefers reliability and past performance to price, make it exceedingly difficult for newcomers to succeed. Therefore, there is little risk of a late entrant disrupting the …show more content…
When suppliers powerful they capture the majority of revenue, limit quality or services, and are able to shift the majority of the costs onto the industry participant (Porter, 2008). However, in the aerospace and defense industry there are many more suppliers than industry participants. In fact, in 2015 58% of the industry’s employment was attributable to suppliers (AIA, 2016). This which given organizations the power of choose. Furthermore, the supply chain sales represented 42% of the overall industry sales. While suppliers and contractors are under pressure with record backlogs, given that the buyers have the choice of supplier they have more power. In addition, while union groups exert some force by negotiating wages and benefits, any union influence is reduced by the contractor passes those costs onto the customer (Ascarelli, 2016). Therefore, supplier power is relatively