Lockheed Martin Evaluation

Firm Evaluation
Lockheed Martin Space Systems Company
Team B 4/25/16 MGMT 4500

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FIRM EVALUATION | Lockheed Martin Space Systems Company
Foreword and Recognition
The following is a written collaboration by the ensuing students attending the University of
Colorado Denver Business School in the spring of 2016 scholastic semester to be used
for educational purposes only:
 Catrina Calderon, BSBA International Studies Emphasis
 Andrea Carter, BSBA Accounting Emphasis
 Fazeela Choudhry, BSBA Finance Emphasis
 Kalleigh Eisley, BSBA Marketing Emphasis
 Emily Girtin, BSBA Human Resources Management Emphasis
 Zach Kloska, BSBA Accounting and Financial Management Emphasis
 Braeden Lipe, BSBA Finance Emphasis
 Keegan Parker, BSBA Finance Emphasis
 Ali Radwani, BSBA Management Emphasis

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Team B | MGMT 4500
TABLE OF CONTENTS
SECTION 1: CASE STUDY ............................................................................................................ 4
COMPANY OVERVIEW ..................................................................................................................... 4
BUSINESS DESCRIPTION ................................................................................................................. 5
Background & History............................................................................................................... 5
Organizational Mission ............................................................................................................. 6
EXTERNAL ENVIRONMENT............................................................................................................... 7
Recent Events .......................................................................................................................... 7
Opportunities and Threats........................................................................................................ 7
INTERNAL STATE OF AFFAIRS.......................................................................................................... 8
Management and Leadership................................................................................................... 8
Financial Valuation ................................................................................................................... 9
COMPETITIVE STRATEGY ................................................................................................................ 9
LONG-TERM OBJECTIVES ............................................................................................................... 9
Grand Strategies .................................................................................................................... 10
SHORT-TERM OBJECTIVES ........................................................................................................... 10
Functional Tactics .................................................................................................................. 11
STRATEGIC EXECUTION ................................................................................................................ 11
CULTURE AND LEADERSHIP........................................................................................................... 12
Executive Bonus Compensation Plans .................................................................................. 12
Current and Historical Culture and Structure ......................................................................... 12
STRATEGIC CONTROL................................................................................................................... 14
INNOVATION AND ENTREPRENEURSHIP .......................................................................................... 14
SECTION 2: IDENTIFICATION OF KEY STRATEGIC ISSUES.................................................. 15
SECTION 3: ANALYSIS AND EVALUATION.............................................................................. 16
EXTERNAL ENVIRONMENT............................................................................................................. 16
Remote Environment.............................................................................................................. 16
Industry Environment ............................................................................................................. 17
Operating Environment .......................................................................................................... 17
INTERNAL ANALYSIS ..................................................................................................................... 19
Resource-based view............................................................................................................. 19
Value chain analysis............................................................................................................... 20
SWOT ANALYSIS......................................................................................................................... 21
ORGANIZATIONAL MISSION ........................................................................................................... 21
COMPETITIVE STRATEGY .............................................................................................................. 23
LONG-TERM OBJECTIVES ............................................................................................................. 24
SHORT-TERM OBJECTIVES ........................................................................................................... 26
Functional Tactics .................................................................................................................. 27
CULTURE AND LEADERSHIP........................................................................................................... 29
Executive Bonus Compensation Plans .................................................................................. 29
Company Environment, Structure, and Leadership ............................................................... 29

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SECTION 4: RECOMMENDATIONS – 5-YEAR STRATEGIC PLAN.......................................... 33
EXTERNAL ENVIRONMENT............................................................................................................. 33
Opportunities .......................................................................................................................... 33
Threats ................................................................................................................................... 33
INTERNAL ANALYSIS ..................................................................................................................... 34
Strengths ................................................................................................................................ 34
Weaknesses........................................................................................................................... 34
ORGANIZATIONAL MISSION ........................................................................................................... 35
COMPETITIVE STRATEGY .............................................................................................................. 37
LONG-TERM AND SHORT-TERM OBJECTIVES .................................................................................. 38
EXECUTIVE BONUS COMPENSATION PLANS ................................................................................... 41
STRATEGY IMPLEMENTATION ........................................................................................................ 41
CONCLUSION ............................................................................................................................... 44
APPENDIX .................................................................................................................................... 45
SECTION 1 ................................................................................................................................... 45
1a – Income Statement .......................................................................................................... 45
1b – Space Systems Financials ............................................................................................. 46
1c – Grand Strategy Examples .............................................................................................. 46
1d – CEO Target Opportunity Mix.......................................................................................... 47
1e – Organizational Charts..................................................................................................... 48
SECTION 3 ................................................................................................................................... 51
3a – In-Depth Analysis: Remote Enviroment ......................................................................... 51
3b – In-Depth Analysis: Operating Enviroment...................................................................... 52
3c – Financial Analysis........................................................................................................... 54
3d – In-Depth Value Chain Analysis ...................................................................................... 58
3e – In-Depth SWOT Analysis ............................................................................................... 59
3f – Grand Strategy Selection Matrix ..................................................................................... 61
3g – Policies to Empower Action............................................................................................ 62
3h – Executive Bonus Programs............................................................................................ 63
3i – Lockheed Martin Assumptions ........................................................................................ 64
3j – Earned Value Management............................................................................................. 65
WORKS CITED ............................................................................................................................. 67

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Team B | MGMT 4500
SECTION 1: CASE STUDY
Lockheed Martin Corporation Aerospace & Defense
Space Systems Company LMT│NYSE
Innovation with Purpose April 25, 2016
COMPANY OVERVIEW
Space Systems Company – Engaged in the
research and development, design, engineering and
production of satellites, strategic and defensive
missile systems and space transportation systems
(Lockheed Martin Corporation).
KEY STATISTICS
Satellites
• A2100 - Low
cost modular
satellite vehicle
• GPS, GOES-R,
and more
Space
Exploration
• Interplanetary
Missions
• Orion - manned
mission to Moon
and Mars
• MAVEN,
InSight,
OSIRIS-
REx,and more
Launch
Vehicles
• Diverse
Solutions
• Atlas V and
Athena Vehicles
• 50 years of
strategic missle
technologies

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BUSINESS DESCRIPTION
BACKGROUND & HISTORY
Lockheed Martin was founded in 1995 as the result of a merger between
Martin Marietta and Lockheed, becoming one of the largest aerospace,
defense, and technology companies in the world. The roots of these
companies dive well back into the early 1900s with Aviation pioneers,
Glenn L. Martin and Allan and Malcom Lockheed, launching their
maiden voyages of their own flying machines and soon after starting their own aircraft
companies. Their aircrafts would be staples of the early days of flight being featured in
movies, wars, and long-distance transportation. After an early organizational breakdown,
Lockheed Martin reestablished itself and its mission in 1928 by incorporating in Maryland.
Soon after growing in recognition as a producer of the
country’s best-known war planes and transport crafts,
including the DL-1 (Lockheed’s first aircraft ordered by the
U.S. armed forces) and Amelia Earhart’s Lockheed Vega.
With the backing and trust of the U.S. government, Lockheed Martin would further
its presence in the defense industry during World War II and the Cold War Era. In the late
1950s Lockheed and Martin became major suppliers to NASA, both establishing
themselves as major players in the aerospace industry. Some major feats include:
launching the world’s first ever weather satellite in 1960, contributing to Neil Armstrong’s
first steps on the Moon in 1969, and the creation of Skylab, the United States’ first space
station. Lockheed Martin has since further established a space system presence by
involving itself with further established satellites for monitoring earth, such as the
Geostationary Positioning System, and Interplanetary Missions with Mars Exploration.
The most significant recent strategic decisions of Space Systems Company

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include: the United Launch Alliance, a joint venture with The Boeing Company to combine
production and launch operations; NASA selecting Lockheed Martin in 2006 as its industry
partner to build the Orion Crew Exploration Vehicle in the transportation of human
explorers to the International Space Station, the Moon, and eventually to Mars; and
accepting contracts from NASA to send America’s next generation GPS and Weather
Satellites to space. Currently Lockheed Martin is led by, Chief Executive Officer and
President, Marillyn Hewson with the Space Systems Company directed by Richard
Ambrose, Executive Vice President.
ORGANIZATIONAL MISSION
Headquartered in Bethesda, Maryland, Lockheed Martin is a company that focuses
its efforts on global security, information technology, and aerospace. In essence, the
company is “principally engaged in the research, design, development, manufacture,
integration and sustainment of advanced technology systems, products and services”
(Lockheed Martin). Lockheed Martin centers around the ideal of scientific advancement
and the delivery of innovative solutions in order to help its customers keep people safe,
as well as provide them with essential services. That being said, a large majority of
Lockheed Martin’s business is with the U.S. Department of Defense and U.S. federal
government agencies. The remaining portion of the company’s business consists of
international governments, as well as some commercial sales of products and services.
Lockheed Martin has operations in over 590 facilities in the United States, and in more
than 70 nations and territories internationally; however, primary U.S. facilities are located,
but not limited to: California, Colorado, Florida, Texas, Maryland, New Jersey,
Pennsylvania, and Texas. The company’s major stakeholders are comprised of
customers, institutional investors, nongovernmental organizations (NGOs), research
partners, and suppliers.

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EXTERNAL ENVIRONMENT
RECENT EVENTS
Below is an outline of some of the most recent and significant events surrounding
Lockheed Martin’s external environment:
OPPORTUNITIES AND THREATS
An opportunity for Lockheed Martin exists in designing an in-orbit manufacturing
and fabrication process. This would help to neutralize the threat posed by robotic 3D
printing processes that are currently being developed by NASA and Made in Space. By
further developing their use of 3D printing and digital design, Lockheed Martin could
potentially create a variety of new opportunities in the space systems market.
Lockheed Martin participates in employee-focused programs that impact
education by supporting colleges and universities, and thus expresses their value toward
educators that are helping to shape the future. By being involved, even in schools at the
primary level, Lockheed Martin is able to recruit potential candidates to aid them in
continuing to be innovative and inventive. A potential threat exists within the political
campaign through the proposal for tuition-free colleges across the United States. This
could potentially change the dynamics for how Lockheed Martin selects candidates due
NASA is working with
Made In Space to
change the way
space systems are
built by building
systems in space
rather than launching
them (Grunewald).
NASA funding is at
an all time low, and
their budget
continues to be
reduced. The
political campaign in
the U.S. could
continue to affect
NASA (Emspak).
Unemployment ratio
is low, and experts
are estimating that
this could change
drastically depending
on the results of the
Presidential election
in the U.S.

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to the high influx of people to filter through.
Another potential threat is Virgin Airlines’ goal to make it space travel possible for
everyone. Lockheed Martin works closely with their competitors, and if they continue,
through this transition, the research derived from Lockheed Martin could help to make
Virgin Airlines’ plans a reality. If Lockheed Martin stays on track with innovation and
modernization, the company will create more opportunities for growth; however this
newfound interest for Virgin Airlines will need to be taken into consideration.
INTERNAL STATE OF AFFAIRS
MANAGEMENT AND LEADERSHIP
The most current news for in regards to managerial decisions is the creation of
Lockheed Martin Energy on March 15, 2016, which combines energy products and
technologies into a single commercial line of business. The company reorganization
developed as a result of two major events at the end of 2015; consequently, the company
has divested most of their IS&GS division subunits, which sold for a reported $6 billion
and purchased Sikorsky helicopter company for $9 billion almost simultaneously. Sikorsky
is worth $5 billion in sales and $16 billion in revenue last year (US SEC). Since 85% of
the company’s revenue comes from government contracts, metrics for accounts
receivable are below industry average; therefore, management has become savvy when
managing free cash flows, which facilitates paying shareholders dividends, repurchasing
shares, making acquisitions, and regularly investing in infrastructure to maintain their
technological edge in the market. Lockheed Martin continues to show growth each year;
however, with military spending expecting to decline yearly and an aging workforce with
an underfunded pension, management needs to find new revenue streams. Especially
when they have a higher than industry average for debt to equity ratio, indicating the
company is aggressively financing growth with debt.

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FINANCIAL VALUATION
Currently Lockheed Martin’s financial condition is improving. As the firm’s income
statement data (Appendix 1a) suggests, they are in a solid financial position. From 2010
to 2015, there has not been any substantial decrease in the company’s net sales. In fact,
since 2013, net sales have steady increased. Furthermore, Lockheed Martin’s Space
Systems Division in particular has been improving financially as well. Financial data for
the division shows their success (see Appendix 1b).
Net sales for Space Systems have fluctuated based on customer categories.
However, Lockheed Martin has always been profitable with government contract jobs and
the company also saw a spike in commercial customers in 2014. Lockheed Martin is
improving their financial position beyond their available assets. The firm is also investing
in more businesses, as they did with its recent acquisition of Sikorsky – an aircraft
manufacturer (United States). As a result, Lockheed Martin is improving their current
financial condition.
COMPETITIVE STRATEGY
Lockheed Martin is using a hybridized focus method as its generic strategy. The
firm operates in a narrow market, and this means the company needs to apply the focus
strategy method. The focus strategy concentrates on a narrow segment and within that
segment attempts to achieve either a cost advantage or differentiation.
The needs of the group can be better serviced by focusing entirely on it (Quick
MBA, Strategic management). By following the focus method, Lockheed Martin is tackling
both methods depending on the market and the customer that they are appealing to.
LONG-TERM OBJECTIVES
Martin Marilyn A. Hewson has stated a key set of two specific long-term objectives
(Lockheed Martin 2014, Media Day) (Next Page).

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GRAND STRATEGIES
Lockheed Martin incorporates two Grand Strategies: Product Development and
Innovation. In applying these grand strategies Lockheed Martin is dominating the
market by holding a large market share position in the United States with increasing
international exposure that is likely to proliferate over the next decade. Each strategy is
discussed below as well as in Appendix 1c.
SHORT-TERM OBJECTIVES
Lockheed Martin places heavy emphasis on sustainability and their short-term
objectives reflect this. According to the firm’s annual sustainability report for 2014, short-
term objectives were influenced by six core issues: Governance, Product Performance,
Talent Competitiveness, Supplier Sustainability, Resource Efficiency, and Information
Security (Lockheed Martin 14).
Product Performance was defined by customer satisfaction with their products’
cost, quality, and reliability. The firm aimed to improve product performance in one year
by innovating in areas that would increase sustainability as a short-term objective. For
"Involves the substantial modification of existing products that can
be marketed to current customers"
Product Development
•Satellites and other space system products are constantly being modified and updated.
•Can be seen with the most recent advancements in technologies such as weather satellites,
high frequency communications, and global positioning systems.
"Seeks to reap the premium margins associated with creation and
customer acceptance of a new product or service”
Innovation
•Lockheed Martin was found upon this principle and is what has led to many successful and long
standing customer relationships.
•3D printing can be seen as a most recent example of this as Lockheed Martin can now lower
cost cycles associated with the payload deployment of satellites.
Increasing Global Market Share
•Expand relationship with other domestic
governments
•Less reliance on local contractors
Continue Developing and Providing
Cutting Edge Technology
•Recruiting High Quality Talent
•Strong Research and Development
Teams

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instance, the company planned to invest in a power generation facility that would provide
consumers with a new source of clean energy (Lockheed Martin 39). In order to sustain
Talent Competitiveness, Lockheed Martin intended to create a more diverse
organizational culture by launching diversity and inclusion programs for employees in
2015 (Lockheed Martin 54).
FUNCTIONAL TACTICS
In order to fulfill their short-term objectives, Lockheed Martin is implementing and
investing in functional tactics that specifically aim to improve sustainability. One of the
firm’s core issues is resource efficiency. In 2014, Lockheed Martin aimed to become more
efficient with its natural resources to reduce carbon emissions. To do so within one next
year, the company planned to pursue solar installations that provided more renewable
energy. In 2014 Lockheed Martin planned to begin two building solar projects in Florida
and California. (Lockheed Martin 75). Implementing functional tactics such as this will
give the firm specific methods to achieve their short-term objectives. In turn, their short-
term objectives are designed to help them achieve long-term profitability and
sustainability.
STRATEGIC EXECUTION
The policies used by Lockheed Martin encourage all employees to maintain high
ethical standards from the top down, which includes not only employees but vendors and
sub-contractors as well. Maintaining high ethical standards is so paramount for Lockheed
Martin that they have equally weighted the dimensions of ethical behavior and tangible
results in their performance reviews of employees. The company also rigorously trains
employees on industry ethics related to government contract work through awareness
training designed to aid detection of conflict and ethical dilemmas, which trains employees
on how to handle a situation and when to involve management. Stringent ethics policies

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implemented by Lockheed Martin are necessary since the company primarily works with
government entities on long-term projects, which mandates federal rules and regulations
that if violated are punishable by fine or imprisonment.
CULTURE AND LEADERSHIP
EXECUTIVE BONUS COMPENSATION PLANS
The bonus program for executives at Lockheed Martin has a complex structure,
which is evaluated and adjusted yearly by a committee of board members to remain
competitive with industry standards and incorporates industry best practice standards.
The elements of the compensation package for executives is broken down into three parts
the graphic below portrays the elements with a breakdown of the most significant aspect,
long-term incentives:
A CEO Target Opportunity Mix can be found in Appendix 1d with a further break down.
CURRENT AND HISTORICAL CULTURE AND STRUCTURE
ORGANIZATIONAL STRUCTURE
With a multiple program approach, Space Systems Company has the attributes
and characteristics of a Multi Divisional Matrix organizational structure. A divisional
structure is described as structure in which a set of relatively autonomous units, or
divisions, are governed by a central corporate office but where each operating division
has its own functional specialists who provide products or services different from those of
Base
Salary
10%
Annual
Incentives
17%
Long-Term
Incentives
73%
50%
Performance
Stock
30%
Restricted
Stock
20%
Performance
Award
3-Year Cyle
Long-Term
Incentives

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other divisions (Pearce & Robinson). A Matrix structure is one in which functional and
staff personal are assigned to both a basic functional area and to a project or project
manager (Pearce & Robinson). An example of this structure within Space Systems
Company is a comparison of the GOES-R program and Orion. Each program has its own
leadership, engineering teams, finance teams, subcontracts, and human resources. Both
programs are within Space Systems Company, but they are completely different products
that contain their own divisions. GOES-R is focused on weather and climate change, and
Orion is focused on human space travel and exploration. The central management team
is located in Colorado, the top management team is located at the headquarters in
Maryland, and they oversee all of the programs within the space industry. An organization
chart of Space Systems Company leadership and leadership profiles can be found in
Appendix 1e.
CULTURE
Lockheed Martin has created a culture-changing environment in terms of diversity,
women’s engineering, and inclusion. Organizational Culture is defined as the set of
important assumptions and beliefs that are often unstated, that member of an organization
share (Pearce & Robinson). Cultural values have been an important factor of how
Lockheed Martin Space Systems chooses, grows, and evaluates its employees. In the
past, as with many companies, male employees have had more opportunities to climb the
corporate ladder resulting in an overall lack of diversity. Lockheed Martin has worked to
instill values such as diversity, and gender equality, resulting in the cultural advancement
of Lockheed Martin. For example, social issues such as gender equality in the workplace,
or the even opportunity for job consideration are highly valued cultural aspects within
Lockheed Martin. Unlike many corporations, Lockheed Martin upholds many
differentiating factors when it comes to the culture of its organization. Marilyn Figlar,

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Lockheed Martin's Vice-President for talent and organizational capability, says, “…The
most important considerations are that performance for our customers does not suffer and
that the individual is treated with respect…” (Lockheed Martin: Changing the Culture of
Leadership). This displays the unique drive to advance one’s company through the
implementation of current and effective business models, as well as cultivating an
encouraging work environment for every employee, regardless of their gender, race, age,
or otherwise.
STRATEGIC CONTROL
Strategic control is the process of “tracking a strategy as it is being implemented,
detecting problems or changes in its underlying premises, and making necessary
adjustments” (Pearce & Robinson, 398). Below is a summary of the types of controls
Lockheed Martin uses:
INNOVATION AND ENTREPRENEURSHIP
Lockheed Martin Space Systems Company is beginning to focus much of its
resources and knowledge on technological innovation. This is due to the increasing
competition and impressive innovation techniques set forth by companies like Space X
•Lockheed Martin makes and monitors certain
enviromental and industy assumptions for the future
discussed futher in Section 3.
Premise Control
•Management commonly keeps up with both external
and internal events that may alter the course of
strategy.
Strategic Surveillance
•While the aerospace and defense enviroment is
relatively stable, the ability to respond to unexpected
events is still present.
Special Alert Control
•Lockheed Martin assesses whether the overall
strategy needs to be changed from a program level to
a management level.
Implementation
Control

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and Blue Origin. Currently Space Systems Company has fostered innovation by using
very large 3-D printers to produce their own materials and parts for satellite production.
The company can now produce parts that are lighter-weight, and with more flexible
materials that are designed to replace machined aluminum parts in aerospace platforms.
This change results in lower manufacturing costs, greater performance, and reduced lead
times (Advanced Materials Pave the Way for Manufacturing Innovation). The company
has also started using virtual reality simulators called the CHIL or Collaborative Human
Immersive Laboratory ("Annual Report." CHIL). The CHIL allows an engineers to virtually
work on a satellite before actually touching the material. This virtual reality platform allows
the engineer to recognize mistakes beforehand, which in turn can allow the company to
avoid the costs associated with these mistakes. Space Systems is working to cut costs
and improve efficiency through these forms of innovation, which will lead Space Systems
to become a much more competitive force in the market. Entrepreneurship is at the
foundation of Lockheed Martin through the Merger of Lockheed Corp. and Martin Marietta.
These founding companies were created on the entrepreneurial ideas of Glenn L. Martin
and Allan Lockheed. These men were great entrepreneurs of their time, and lead the way
for aerospace technologies in the future.
SECTION 2: IDENTIFICATION OF KEY STRATEGIC ISSUES
In our analysis of Lockheed Martin, three key strategic issues can be identified:
Lockheed Martin
has been risk
adverse which may
be limiting return
While there is little
exposure to
suppliers, there are
also no major
relationships
Risk
NASA funding is at
an all time low
Government
conracts are
evolving to be less
company friendly
Customer
Exposure
Lockheed's
workforce is aging
drastically
Business Savvy
millineals are
taking over more
and more adding to
the challenge of
talent acquisition
Workforce

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SECTION 3: ANALYSIS AND EVALUATION
Remote, industry, and operating environment comprise a firm’s external
environment and influence a firm’s competitive strategy explored further below:
REMOTE ENVIRONMENT
*See Appendix 3a for an in-depth analysis of the remote environment.
Social and
Technological
Factors
The widespread use of
personal technology, such
as smartphones, requires
effective space systems to
order to properly function.
3D printing is providing a
plethora of new
opportunities for a variety
of industries.
Political
Factors
The upcoming presidential
election will play a large
role in how government
funds will be allocated, and
what regulations and
contracts will be made.
Funding for NASA is at an
all-time low.
Ecological
Factors
Worldwide depletion of natural
resources is making the use of
traditional fossil fuels more
impractical and costly.
Congress created the
renewable fuel standard
program in an effort to reduce
greenhouse gas emissions
and expand the nation’s
renewable fuels sector
("Renewable Fuel Standard
Program")
Economic
Factors
There are major government
efforts to increase trade
among developed countries
through the Trans-Pacific-
Partnership, and the
Transatlantic Trade and
Investment Partnership with
Europe (Chafuen).
There is a slowdown in the
global economy.

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INDUSTRY ENVIRONMENT
Michael Porter‘s Five-Forces Model is used
to show how competition is shaped within
an industry. The five forces that comprise
this model include: industry competitors,
new entrants, buyers, substitutes, and
suppliers. Further analysis of these forces
will help to accurately position Lockheed
Martin within the space industry. The
collective strength of the space industry is
high. When there are low barriers to entry,
it is determined that the force is strong.
The space industry has gradually started to increase its amount of competitors with
the advancement of technology over the past few years. Competitors in this industry will
include other aerospace companies, like: Boeing, Northrup Grumman, Raytheon, and
Space X. Other competitors in the industry include other manufacturers, like Airbus and
United Technologies. The major determinants of competition include the ability to reduce
costs and maintain access to foreign markets. These qualities help to gain continued
success in the marketplace.
OPERATING ENVIRONMENT
Lockheed Martin’s competitive position is relatively strong within the space
industry, and has continued to see growth over the past several years. Lockheed Martin
is a pioneer in Space Systems with an advantageous position in R&D and a plethora of
experience thus creating an opportunity in terms of technological position. However, the
company does not have any significant exposure to their suppliers. By further developing
relationships with their suppliers, it could help Lockheed Martin to further develop its own
Industry
Competitors
STRONG
New
Entrants
WEAK
Buyers
STRONG
Substitutes
STRONG
Suppliers
WEAK

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3D processes and digital design to start manufacturing satellites in space, and potentially
lower costs. Developing stronger exposure to their suppliers would also help with
manufacturing materials to be able to continue to be at the peak of their innovative
designs. Potential threats exist within the industry in terms of other companies that are
starting to break through the barriers to entry in an already small, competitive industry. It’s
important that Lockheed Martin begins taking more risks in order to remain strong within
their competitive position in the space industry.
*See Appendix 3b for an in-depth analysis of the operating environment.
•LM’s wages may not be as competitive as others in the industry. This
can result in the loss of capable employees, which are essential to
success.
•There is not a shortage of engineers entering the workforce with
engineering bachelor’s degrees growing by 5.6 percent during 2011,
reaching 83,001 (Yoder).
Labor
•LM's Baa1 rating indicates they are subject to moderate credit risk. LM
is considered medium grade and as such may possess certain
speculative characteristics (Harvey).
•Creditors perceive the firm as having an acceptable record of past
payments creating opportunities to finance possible acquisitions
through debt.
Creditors
•Fixed contracts prevent LM from taking advantage of some the most
competitive supplier prices in the market.
•Does not have significant exposure to suppliers, further developing
relationships would help with developing new products as well as
manufacturing.
Suppliers
•Being located in the United States has allowed for LM to obtain a large
amount of contracts and business with the United States government.
•By maintaining thier reputation as the leader in space systems and
keeping prices competitive, LM can maintain lucrative contracts.
Customer
Profiles

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INTERNAL ANALYSIS
RESOURCE-BASED VIEW
Lockheed Martin has created competitive advantage using their 104 years of
experience to understand what the aviation industry needs and how to meet those needs
using resources the company has cultivated over the years. The firm has amassed $5.5
billion in facilities and equipment located in 36 countries around the world. The company
also specializes in procurement in the way it trains and works with vendors to reduce
defects and find cost savings. Lockheed Martin continues to innovate in design, process,
and instrumentation due to their unique mix of skills and knowledge provided by their
highly experienced personnel; furthermore, the firm then uses cross-functional teams to
reengineer designs and processes to implement huge cost savings. Their cross-functional
teams have yielded 380 patents in 2014 and many top-secret proprietary intellectual
properties, which combined make the company the leader in awarded government
contracts. The relationships the company has built in its lengthy tenure have made it an
expert at navigating sales and distribution in the space industry regulated by the Arms
Export Control Act. The downside of so many government contracts is the slowest
accounts receivable turnover in the industry and that is expected to get worse with
changes in how government contracts are billed and paid in the next year. Lockheed
Martin is carrying more debt than its competitors, which means some of the company’s
growth is funded by debt.
The resource view based guidelines reveal Lockheed Martin possesses resources
and skills better than competitors because the company is awarded the most contracts,
but does not pay the most in fines and penalties for violations as their competitors (POGO).
The resources the firm has created are difficult for their competitors to imitate. For
example, proprietary knowledge on top-secret projects translates to future contracts for
the company. The patents developed by the company yield revenue even when the

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company shares a contract with competitors. The depreciation of resources is
straightforward and quantifiable for most tangible and some intangibles like software;
however, the company will lose significant knowledge base of manager, scientists, and
engineers when their 100,000 baby-boomers begin retirement.
VALUE CHAIN ANALYSIS
The value chain for Lockheed Martin demonstrates a company that has cultivated the
ability to transform inputs into outputs more efficiency using a sophisticated supply chain
management system, rigorous training, and investing in IT infrastructure. By using
16,000 vendors, the company can purchase parts at lower cost than producing many of
the components that make up a satellite, which translates to better margins. Training
and policy drive the knowledge base and capability of employees and vendors so that
part procurement and production meet customer needs quicker (Fogarty). The
company’s low cost approach differentiates their products from competitors and their
internal policies and training are aimed at finding cost savings, so the company can fulfill
their government contracts quickly.
*See Appendix 3c and 3d for more in-depth value chain and financial analysis.
Tangible
•$5.5 Billion in Property,
Plants & Equipment
•540 facilities in 36
countries
•16,000 Vendors for
Procuremnet
Intangible
•104 Years of
accumulated industry
experience
•380 U.S Patents
granted in 2014
•Intellectual (proprietary)
Property developed -
many top secret
Organizational
Capabilities
•Use Cross-Functional
teams to develop
efficiencies in process
and cost savings.
•Supply Chain
Management
•Innovation- company
invests excess capital
into R&D

21
SWOT ANALYSIS
*An in-depth SWOT Analysis can be found in Appendix 3e
“What is our business?” is relative to asking, “what is our mission?” According to
Peter Drucker, "a business is not defined by its name, statutes, or articles of incorporation
– it is defined by the business mission. Only a clear definition of mission and purpose of
the organization makes possible, clear, and realistic business objectives.” Therefore,
having a clear mission is vital to any organization. Furthermore, from the speech of Colin
Marshall (Deputy Chairman, British Airways), "A corporate mission is much more than
good intentions and fine ideas. It represents the framework for the entire business, the
values which drive the company and the belief that the company has in itself and what it
can achieve."
As a leader in space technology, Lockheed Martin’s goal is to bring people the
information it craves. The constant and ever-increasing demand of knowledge is met by
Lockheed Martin’s space technology systems connecting people, generating information,
and sharing information around the world. Since the unveiling of Satcom-1 in 1975, the
Streghths
• National and Global
Operations
• Barieers to Entry for
Gov. Contracts
• Reliable Customer
• Strong Evolving
Product Portfolio
• Employee Retention
Weaknesses
• Governemnt
Contracts Fixed vs.
Cost Plus
• Low Price Approach
• Concentrated Buyers
• Aging Workforce
Threats
• Slowdown of the
global economy
• Government contracts
and regulation
• Intense competition
Opportunities
• Strategic acquisitions
• Rising defense
spending in the U.S.
• Accelerating U.S.
military and space
market

22
Team B | MGMT 4500
organization has launched over 100 commercial satellites of which have served a
multitude of missions. For example, Lockheed’s A2100 satellite “serves as the common
framework behind [the organization’s] production programs and has been adopted for
commercial and governmental use” including weather satellites, government
communication satellites, as well as GPS satellites. Lockheed is also doing its part in
reducing the cost and cycle time of its optical payload and satellite operations. The
developments being made at Lockheed’s Center of Excellence is the driving force behind
what the organization believes to be the next information revolution and the convergence
between customers. The organization’s Advanced Technology Center is an “internal R&D
organization that serves to not only support innovation but technological invention as well.
We are inventing enablers that lead to “generation after next” solutions and capabilities”
(Lockheed Martin).
Additionally, it has been noted that organizations today live in what is referred to
as a “glass house” and therefore have greater public visibility. Society has an increased
awareness of an organization’s activities and the growing reputation of ‘social welfare’ or
Corporate Social Responsibility (CSR) is compelling companies to set proper goals and
strategies. STEM (science, technology, engineering, mathematics) education is one way
in which Lockheed Martin chooses to focus its space systems corporate social
responsibility. The organization believes in the education of today’s youth in these
specified areas because it bears a heavy hand on not only the future success of the
company, but of our nation’s technological advances as well.
According to A Sense of Mission by A. Campbell, M. Devine, and D. Young, a
company’s mission should adhere to the following four criterion: Purpose, Strategy,
Standards/Behavior, and Values. As previously stated, Lockheed Martin’s leading goal is
to advance scientific discovery and solve challenges with innovative solutions. The

23
organization then strategizes in becoming a global leader through the support of its
customers and delivery of services; and by way of its additional focus of the education of
today’s youth, Lockheed Martin’s CSR sets a behavioral standard to be admired by the
public. Lockheed Martin has well established that across every sector the organization’s
primary values include doing what is right, respecting others, and performing with
excellence. Thus, based on both the internal and external analysis of Lockheed Martin’s
current mission, it is abundantly clear that the organization holds a firm grasp over the
purpose and execution of the company’s mission.
Lockheed Martin employs a hybridized focus method as their generic strategy. By
leveraging the following three strategies, the company can offer special financing to
buyers, distinguish themselves from the pack, and tailor the product specifically to the
needs of the consumer.
With top competition always looming in the space systems industry, it is essential
to differentiate to the point where the company can start increasing market share year
after year. In 2015, U.S. government contracts accounted for 97% of net sales of their
space systems segment (Lockheed Martin, Form 10-K - 2016), with only 2% from
international customers and 1% from U.S. commercial customers. This illustrates an
overwhelming opportunity for international expansion. If they wish to enter foreign markets
in this area, they must find ways to be unlike their competition.
Lockheed Martin also uses aspects of low-cost leadership (or Competitive
Strategy). “Low-cost leadership is offering the best technologies in the market at a lower
price point, which gives them a competitive advantage over their market competition”.
Their field of work relies on having the highest quality offerings with the lowest costs.

24
Team B | MGMT 4500
Having the low-cost leadership strategy creates incentives for buyers all over the world.
To maintain low cost leadership advantage over their competitors, Lockheed
Martin must focus their research and development sector, as well as hire top talent in the
country in order to attend to the needs of a particular market segment, namely that of
space systems technologies.
LONG-TERM OBJECTIVES
Lockheed Martin’s long-term objective is to cultivate beneficial relationships with
foreign governments, develop state of the art space systems, and expand their market
share globally by increasing productivity, as well as nurturing long-term employee
development initiatives. Currently Lockheed Martin’s main source of income is in the
United States, which has limited opportunities for profitability, competitive positioning, and
is a fast paced, competitive market.
Investing time, energy, and focus in outside countries can offer Lockheed Martin a
much-needed backup plan in the event that domestic contracts begin to decline
dramatically. Expanding relationships worldwide will create new income streams and
provide the necessary support systems required to navigate outside of the U.S.; this will
certainly maximize their profitability long-term. It is essential to leverage the expertise of
existing foreign companies and governments in uncharted territory. By methodically and
strategically utilizing this framework, Lockheed Martin will be hedging their foreign risk and
increasing their probability of success.
Strategically developing more efficient methods of productivity will pave the way
for Lockheed Martin’s inevitable transition into the global marketplace. Consistently
upgrading their means to achieve higher rates of efficiency will increase the demand and
attractiveness of their products and services on a global macro scale. Once again, this is

25
absolutely necessary moving forward if they want to be more successful outside of the
United States.
In order to be on top of the food chain, Lockheed Martin needs to focus on strong
competitive positioning. Dominating their competitors will send a powerful message to the
governments of the world looking to partner with Lockheed Martin and will further increase
their likelihood of international expansion. However, by sticking to one marketplace,
instead of multiple, they will eventually be at a loss and their competitors will surpass them
by doing what they would not.
In order to achieve higher levels of productivity, technology, and competitive
positioning, Lockheed Martin needs to provide the best training programs for their
employees over time if they want to successfully carry out their long-term objectives.
Lockheed Martin is known for their cutting edge research and development, and that along
with large government contracts helps to support them and keep them thriving. Lockheed
Martin employee’s value quality education and training, but it is not enough to assume
they will always retain their business status quo. By maintaining their employee
development objectives over time, they will undoubtedly see an increase in all areas of
their business long-term.
In order to achieve these long-term objectives, Lockheed Martin needs to have a
set of criteria in order to accurately gauge whether or not they are a good objectives:
Changing the organization in small steps that won’t affect the overarching
company in a dramatic fashionFlexibility
•Scale back the vast amount of business segments that the company has when entering a new market in
order to effectively reduce the likelihood of having the newer market collapse relatively quickly.
Calculating the time it will it take for an investment to be paid back over time.Measurability
•Entering a new market without first knowing exactly reviewing its measurability can be a gigantic, and
potentially costly, risk.
•A diligent company should know what needs to be done in the new market to help achieve their goal, how
they will achieve it, and approximately when it will be achieved.

26
Team B | MGMT 4500
GRAND STRATEGIES
Lockheed Martin has predominantly been utilizing two grand strategies. The first
is Product Development, which focuses on substantial modifications of existing products
that can be marketed to current customers both nationally and abroad. Secondly,
Lockheed Martin employs the Innovation grand strategy, which seeks to reap the premium
margins associated with the creation and customer acceptance of a new product or
service (Pearce & Robinson). If they were not constantly striving for new ways to innovate,
they would certainly not have one of the largest governments in the world seeking their
expertise. Lockheed Martin has been utilizing these strategies for years by creating,
sustaining, and delivering cutting-edge technology on time. More analysis on our grand
strategy selection can be found in Appendix 3f.
SHORT-TERM OBJECTIVES
Lockheed Martin’s short-term objectives are effectively designed to achieve the
company’s strategy and long-term goals. Some of the company’s overall goals concern
sustainability. To increase specificity, Lockheed Martin has created categories for their
Willingness of employees to be productive.Motivation
•Management strongly comes in to play here as well since it is their partial responsibility to perpetually seek
out ways to create environments that enable constant motivation.
•Work on something novel, such as something that none of their competitors are doing.
“We solve complex challenges, advance scientific discovery and deliver
innovative solutions to help our customers keep people safe and provide them
essential services.” (lockheedmartin.com)Suitability
•The mission clearly stands for making the world a better place and helping to create viable solutions for
those they serve
•By expanding to new markets they are facing new challenges and finding new solutions along the way.
Clear understanding of company objectivesUnderstandability
•With many, sometimes complex and broad, objectives it becomes increasingly important that all managers
clearly understand the goals and are on the same page.
•easy in large companies to have a breakdown in communication somewhere along the way, which can
ultimately place the company in a compromising position.

27
objectives, such as resource efficiency and product performance.
To improve product performance and increase sustainability, Lockheed Martin
included the building of a power generation facility as a short-term objective. By doing so,
they want to use renewable energy. This objective was measurable and also linked to the
firm’s long-term objectives. The sustainability report released yearly by the company
stated their hope to provide a clean energy source for 5,000 homes in Germany, where
they are building the plant (Lockheed Martin 39).
All of the short-term objectives presented by Lockheed Martin in their report follow
this format. They are:
 Measurable
 Linked to overall long-term objectives and goals
 Prioritized
o They consolidated analyses of internal and external stakeholders to
determine which objectives are most important to the firm.
However, these short-term objectives would be more effective if specific deadlines
were attached to them. It is implied they are short-term, and are intended for fulfillment
within a year. Setting a deadline would help the firm communicate the importance of an
objective when combined with their prioritization system.
Despite that, Lockheed Martin’s short-term objectives are still efficient in facilitating
the achievement of their long-term objectives. They are more focused than the firm’s long-
term objectives. By defining such detailed short-term objectives, the company has created
a powerful multi-step plan that will help them achieve long-term sustainability and
profitability, particularly in the space systems market.
FUNCTIONAL TACTICS
To further improve product performance sustainability, especially in their space

28
Team B | MGMT 4500
systems division, Lockheed Martin has implemented functional tactics that will reduce
material waste in the manufacturing processes. The functional activities necessary to
achieve this include implementing 3D printing technology, which reduces the weight of
critical components in their products. A reduction in the weight of those components can
result in more efficient products, such as more fuel-efficient rockets. Therefore, the
functional tactics Lockheed Martin employs during their manufacturing process are directly
related to their product performance objectives. Their functional tactics influence their
short-term objectives, which in turn affect their long-term objectives.
Lockheed Martin also hopes to improve resource efficiency. One of their functional
tactics in this case means to increase the usage of renewable energy sources. That
involves implementing “green” programs and initiatives that encourage the use of solar
energy within the company, while incentivizing employees to do the same at home.
Lockheed Martin has also created programs that are designed to reduce carbon emissions
by using alternative energy sources while manufacturing products (Lockheed Martin, 70).
This application of their functional tactics serves to achieve the firm’s short-term resource
efficiency objectives as well.
Ultimately, Lockheed Martin has created very effective functional tactics and
functional activities. Managers and executives have defined them in a way that ensures
they will become routine activities in various functional areas. In turn that will facilitate
fulfillment of their short-term objectives.
STRATEGIC EXECUTION
The highly sensitive nature of government work requires Lockheed to protect their
reputation for integrity, excellence and a high ethical code represented by each and every
employee, vendor, or contractor affiliated with the company. The Science of Citizenship

29
was published in 2014 by Lockheed Martin for the purposes of disseminating their core
idea of sustainability, for this document identifies policy throughout as it relates to
customers, employees, vendors, and the company’s commitment to society on a global
scale. (See Appendix 3g for extensive lists of policy) A wide range of policy exists for
employees to consult for advisement before involving a superior; for example, policies are
available for ethics, business conduct, safety, quality, mission success, use of company
assets, recording and verifying direct labor costs are just a few.
CULTURE AND LEADERSHIP
The Executive compensation at Lockheed Martin is based on pay for performance
and has two components; hence, the fixed component offers a base salary benchmarked
at the industry's fiftieth percentile yearly and the variable component has an annual cash
bonus measured on multiple dimensions and a long-term incentive with three parts based
on a three year cycle (See Appendix 3h, Exhibit 1). The structure of the executive bonus
program reduces agency problems because the salary is benchmarked to industry
standards, the annual cash bonus is measured against three dimensions of annual
performance, and the mix of stock aligns executive goals with shareholder interests.
COMPANY ENVIRONMENT, STRUCTURE, AND LEADERSHIP
The Multi Divisional Matrix Structure that Lockheed Martin uses as its
Organizational Structure yields many benefits to facilitating overall effective strategy
implementation. A divisional structure lends a hand to larger, more expansive companies
that allows increased focus and ultimate accuracy to each different portion of the company
such as Aeronautics, Missiles and Fire Control, Mission Systems and Training, and Space
Systems to name a few (Pearce & Robinson).
The positive relationship that this divisional structure generates for Lockheed

30
Team B | MGMT 4500
Martin far outweighs any possible cons when it comes to the corporate meshing between
the firm’s environment, culture, and governance structure. Pros of this divisional structure
include sustainability and responsibility within the corporation. Elaborated on in the three
core values of the company: Do What's Right, Respect Others, and Perform with
Excellence (Lockheed Martin - Who We Are).
The environment maintained in the workplace at Lockheed Martin is a gleaming
example for any business to follow. With a very firm Code of Conduct and completely
integrated Ethics Training, a positive environment is created and maintained for
employees. Findings point towards overall benefits to the efficiency and financial report
of Lockheed Martin due to this work environment where employees are treated with
respect, high industry wages, and a welcoming business culture.
The selected cultural values of Lockheed Martin are only amplified by the divisional
structure of the company. Due to the integration of the cultural values into the operational
production of how Lockheed Martin chooses, grows, and evaluates its employees, the
overall efficiency and productivity of the different divisions out performs other competitors
that lack such high cultural standards.
Lockheed Martin also paves the way for a well-structured corporate responsibility
governance model as well as broad experience within the corporate realms of ethics and
sustainability. As enhanced upon by Leo Mackay, Lockheed Martin's vice president of
ethics and sustainability, “Our governance structure for sustainability allows for balanced
leadership oversight and guidance along with broad-based support from each of our five
business segments for implementing strategy and building awareness” (Watterson,
Brown).

31
The strategic leadership
practices of the company are a
source for competitive advantage in
Lockheed Martin’s field. Utilizing an
effective Full Spectrum Leadership
Model, the company operates on five
imperative (Right).
The Full Spectrum Leadership Model is a perfect example of organizational
leadership having a positive impact from CEO’s all the way to functional positions within.
The five imperatives move the company toward a vision over time and develop the
organization’s future leadership and culture (Pearce & Robinson).
That being said, Lockheed Martin faces some challenges when it comes to
leadership. The majority of top leadership at Lockheed Martin is of the baby boomer
generation. This means that most of the top managers at Lockheed are of retirement age.
The employees that will replace these
top managers are at a younger age.
This can be a difficult transition for the
younger employee and the
corporation. Lockheed Martin will
need to use their resources and
leadership development programs to
ensure these younger employees
continue the success of the company.
“Leaders have a responsibility to create an
environment where all employees feel valued –
an environment where employees feel at ease
and can bring their full selves to work every
day. This type of environment can help drive
innovation and strengthen our company’s
performance. The imperatives set forth in Full
Spectrum Leadership help engage employees
and translate into a more cohesive, productive
work environment.” – Rick Edwards, VP for
Missiles and Fire Control
Deliver Results
Shape the Future
Build Effective
Relationships
Energize the
Team
Model Personal
Excellence,
Intecgrity, and
Accountability

32
Team B | MGMT 4500
STRATEGIC CONTROL
With over a century of experience, Lockheed Martin’s use of strategic controls
overall appear to be appropriate when it comes to tracking business strategy. Below are
some examples of how and why these controls accomplish this task:
Lockheed Martin Space Systems Company’s most current forms of innovation are
through part production with 3-D printers and virtual reality simulators to assist in satellite
production. These forms of innovation are appropriate for the company as they drastically
reduce costs and increase the efficiency of satellite production. Most customers that
purchase satellites or space products are looking for quick builds, cheaper production
costs, and quality products. All of these attributes that the customers need can be fulfilled
through 3-D and virtual innovation. There are companies like Space X and Blue Origin
that are taking a much different approach to space innovation. Both of these companies
Transaction, Strategy, and Financial AssumptionsPremise Control
• Various Assumptions are made by management which can be seen futher in Appendix 3i
• These assumptions are in turn monitored in order to make adjustments
Key Internal and External events are conveyed throughout orginizationStrategic Surveillance
• Through the form of regular communications from top to bottom, including regular staff meetings
• Information spreads quickly to all parts of firm
Security and ProtectionSpecial Alert Control
• Given the sensitive data and material being worked on, Lockheed Martin has security and emergency teams on its
campuses that can respond quickly to unexpected events, such as war, terrorism, or disasters.
• Strict Employee Background checks are also implemented
Earned Value Management and Quarterly ReviewsImplementation Control
• Strategy Implementation is analyzed and monitored at both a program and management level
• At a program level, Earned Value Management is a technique used that can monitor cost trends, variances, and
planning schedules utilized program level milestone reviews. More information on how EVM is implemented can be
found in Appendix 3j
• Information is then trickeled up to Management in the form of Quarterly Reviews to ensure the effectiveness of
overall strategy

33
have produced rockets that can be launched, then can be landed back to Earth, and further
the rocket can be re-used by the customer. This has been a huge innovation that has
caught the attention of many customers and other space companies. Lockheed Martin
must use their current innovation and produce similar technologies as Space X and Blue
Origin to be a dominant competitive force in the market.
SECTION 4: RECOMMENDATIONS – 5-YEAR STRATEGIC PLAN
OPPORTUNITIES
Lockheed Martin has the opportunity to continue to be at the forefront of innovation
by designing an in-orbit manufacturing and fabrication process. In order to successfully
accomplish this opportunity Lockheed Martin may need to look at strategic acquisitions
that would help them to continue to advance further in the space systems market. Another
opportunity exists in the rising defense spending in the US, and accelerating US military
and space market. Currently it was founded that spending for NASA is at an all-time low,
so the fact that there are signs of increased spending indicates that some of Lockheed
Martin’s customers will have the ability to be key players in their success. Buyer power is
relatively strong in terms of Porter’s Five Forces; therefore these advances show potential
opportunities still exist for Lockheed Martin.
THREATS
Lockheed Martin’s external environment creates a variety of threats that make it
difficult for the organization to constantly protect against Porter’s Five Forces. As can be
seen in the External Environment portions of Section 1 and Section 3, some of the threats
faced by Lockheed Martin include: Virgin Airlines’ goal to make space travel available for
everyone, NASA and Made In Space’s development of in-orbit space systems
manufacturing, the slowdown of the global economy, government contracts & regulations,

34
Team B | MGMT 4500
and intense competition. However, Lockheed Martin can combat these threats. For
example, by developing their own in-orbit manufacturing and fabrication process for space
systems they can neutralize the threat of their competitor’s development, and create a
variety of new cost-saving opportunities for their own space systems. Additionally, the
threat of intense competition could be reduced through horizontal integration. By acquiring
a smaller competitor such as Blue Origin, Lockheed Martin would increase their market
share and reduce their competition in the Space Systems industry.
INTERNAL ANALYSIS
STRENGTHS
Lockheed Martin possesses a strong portfolio with segments operating in national
and global markets for government entities using employees with exceptional skills and
experience in engineering, processes, and navigating government contract requirements
and specifications when building high technological products. Their understanding of
government methodology garners the company the most awarded contracts in the
industry. Since the company regularly invests in R&D expenditures, employees get to
work with the most advanced technology and science available, making employee
retention high.
WEAKNESSES
The underlying premise that concentrated buyers have the upper hand in contract
negotiations has forced Lockheed Martin to invest in mandating expensive employee
training programs conducive to understanding and complying with government contracts.
The downsides of Lockheed Martin having the most government contracts are the slowest
A/R turnover in the industry and unexpected budget cuts sometimes stop a long-term
contract, ending the revenue stream all together. As a low cost leader, Lockheed Martin
must constantly strive to find ways of offering a low price in the RFP (request for proposal),

35
but not so low that their engineers can’t find ways of increasing the profit margin in the first
run of the product using known or new information and technology. The company’s large
aging workforce (100,000/130,000 are baby boomers) jeopardizes the experienced mix of
skills the company has cultivated over the years and creates a heavy pension obligation
for the company to meet.
Based off the findings of this study, a conclusion can be drawn that Lockheed
Martin’s current mission does not need to be reformulated. According to Strategic
Management: Planning for Domestic & Global Competition, the fundamental
characteristics of an organization’s mission should answer the following questions: “Why
is the firm in business? What are our economic goals? What is our operating philosophy
in terms of quality, company image, and self-concept? What are our core competencies
and competitive advantages? What customers do we serve? And how do we view our
responsibilities to stockholders, employees, communities, environment, social issues, and
competitors?” (p. 24).
Without having to dig very deep, Lockheed Martin has made it abundantly clear
that the organization’s main purpose is to advance scientific discovery, and solve
challenges with innovative solutions. Specific to its space systems sector, Lockheed
Martin is working hard to engineer satellites that are not only resilient and affordable, but
flexible as well. As stated on the company’s website, “We're applying innovation to deliver
value to government and commercial customers in the form of better buying power and
applying our broad mission expertise to help them pave the way for tomorrow’s
architectures.” (Lockheed Martin)
As far as Lockheed Martin’s operating philosophy in terms of quality, image, and

36
Team B | MGMT 4500
self-concept, “Lockheed Martin’s business success depends on our commitment to
integrity. We do more than just comply with laws and regulations. We aim to do what is
right every day.” Further, Leo Mackay, vice president of Ethics and Sustainability,
continues on the company website to say that ethics and integrity have always been the
core principles integrated in the organization’s three main values. These three values are
as follows: Do What’s Right, Respect Others, and Perform with Excellence. (Lockheed
Martin)
Both Lockheed Martin’s core competencies and competitive advantages are the
ability to use its ever advancing technological and information systems to continuously
design and innovate high quality products at affordable prices. Lockheed Martin has
recognized that there is a perpetually increased demand of knowledge and the
organization has met this need by connecting people, generating information, and sharing
said information around the globe.
All of these aspects, of course, are tied in to the firm’s customer base, of which a
major portion consists of the U.S. Department of Defense along with other U.S. federal
government agencies. The remaining portion of Lockheed’s business is attributed to the
commercial sales of products and services. In 2014, 79 percent of the organization’s net
sales were from the U.S. government, 20 percent were from international customers
including foreign military sales contracted through the U.S. government, and only one
percent of sales were due to U.S. commercial sales. Nonetheless, no matter how sizable
or how modest a customer may appear each is treated with the same integrity, innovation,
and respect.
As with customers, the same ideal holds true in regards to the organization’s
stockholders, employees, communities, environments, and competitors. In fact, Lockheed

37
Martin refers to this concept as the Science of Citizenship of which its purpose is to “foster
innovation, integrity, and security to protect the environment, strengthen communities, and
propel responsible growth” (Sustainability). Thus, it follows that Lockheed Martin’s current
organizational mission does not need to be reformulated.
We recommend that Lockheed Martin pursue a dedicated differentiation generic
strategy to improve their place in the market moving forward. Since Lockheed Martin is a
huge company overall with really big deep pockets, it would be really easy for them to
succeed with this new generic strategy.
In order to succeed in using differentiation, Lockheed Martin would need to have
a good research and development department along with delivering high quality products
and services on time. This should not be a problem since the company has obtained most
of the United States government contracts.
Lockheed Martin also has the ability to both attract top talent by leveraging their
R&D in order to yield outstanding results. If they can make differentiation and innovation
a major goal going forward, the company should be able to catch up with companies like
Space X, who are stealing market share and public sentiments every day.

38
Team B | MGMT 4500
LONG-TERM AND SHORT-TERM OBJECTIVES
LTObjectivesGrandStrategyShortTermObjectivesFunctionalTacticsTimeFrameResponsibility
CompetitivePosition
Increasemarketshare
by20%Dec.31,2021
HorizontalAcquisition
Innovation
Contractualpartnership
withsmallercompanies
whoposecompetitvethreat
byApril30,2017
Determine
contractualdetails
partnershipwithBlue
Origin
Completecontractual
partnershipwithBlue
OriginbyDec.31,2016
RickAmbrose,ExecutiveVPofSpaceSystems
DaveMarkham,VPofStrategy&Business
Development,
JoesephTrench,VPofBusinessTransformation
SocialResponsibility
Increasepublic
awarenessof
sustainabilityinthe
U.S.throughmarketing
byDec.31,2018
MarketDevelopment
Produceaseriesof
sustainabilitymarketing
campaignsbyAugust1,
2016
Produce
sustainability
televisoncommercial
forprimetime.
AircommercialbySept.1,
2016
MarketingCommittee
TechnologicalLeadership
Advance
LM'sTechnological
Leadershipthrough
supportingR&D
developmentbyApril
1,2021
ProductDevelopment
Innovation
Evaluatekeytechnology
gapsorindustrytrendsto
determinewhereR&D
investmentshouldbe
concentratedbyOct31,
2016
On-siteevaluationof
primaryspacefacility
acceptingR&D
investment
Completeevalutationof
primaryspacefacility
receivingR&Dinvestment
byApril1,2017
JulieSattler,VPofOperations,MarkPasquale,
VPofEngineering&Technology
EmployeeDevelopment
Leveragenew
employeeknowledge
throughhorizontal
acquisitionbyJan.1,
2020
HorizontalAcquisition
VeritcalAcquisition
Identifykeyoperational
advantagesofacquired
companybyNov.30,2016
Sendanoperational
representativeto
acquiredcompany
Detailedoperationalreport
byMarch1,2017
RickAmbrose,ExecutiveVPofSpaceSystems
JulieSattler,VPofOperations,
MikeHamel,VPofStrategicSolutions
Profitability
Reduceunderutilized
inventoryassetsby
10%April1,2020
Turnaround
Innovation
Identifyallunderutilized
assetsandcostdriversby
Nov.30,2017
Identifythemost
underutilizedassets
Detailedreportcompleted
byDec.31,2017
BruceTanner,V.P.,CFOandMarkPasquale,
EngineerandTechnicalExecutive
Productivity
Increaseoperational
efficiencyby20%by
Dec.31,2020
Turnaround
Innovation
Duplicate/Share
processesforbetter
operationalefficinecyby
Jan.1,2018
Identifyspecific
processesto
replicate/shareat
LockheedMartin
Recognizebestproccesses
whereefficienciescanbe
realizedbyMarch31,2018
JulieSattler,VPofOperations,JosephTrench,
VPofBusinessTransformation
EmployeeRelations
Compilealistofthe
toptenglobal
technicaluniversities
supportingspace
systemsbyJan.1.
2019
ConcentratedGrowth
Buildrelationshipswith
targetedUniversity
representativesbyJune1,
2017
Narrowjobfair
choicestothree
Universities
SecureJobfairdatesfor
topthreeUniversities(MIT,
Stanford,&Cambridge)
ArmandoL.Castorena,VPofHumanResources
ReformulationPlan

39
GRAND STRATEGIES
STRATEGIC EXECUTION
First, management should evaluate the threshold of all current policy, then
determine how to lower that threshold to subordinate levels to increase speed. Speed
and responsiveness can be enhanced when decisions are made at the lowest level. As
the company continues to develop innovative ways to use 3-D printers, and other
advanced technology to reduce costs and time associated with supply management, the
threshold for supervisor involvement will reduce due to automations using technology.
Second, Lockheed Martin should implement an innovative time out policy
specifically designed to encourage employee social networking. Today, students
graduating and employees in the job market understand the importance of networking and
how that can lead to future job opportunities, especially as the world becomes more flat in
Grand strategy Quadrant G.S. Selection Matrix
Horizontal Acquisition and Innovation
IV & III: Acquiring a company that has similar production
line in order to leverage any threats from the competitor
and build a relationship that can help the company to be
more innovative.
Market Development
III: Increase advertisement campaigns in order to spread
more awareness about company goals and achievements.
Product Development and innovation
III: Supporting the R&D department by evaluating industry
trends to understand the company’s weakness. This will
create higher efficiency and more innovation.
Horizontal Acquisition and Vertical
Acquisition
I & IV: Acquiring a new company can lead to learning
their operational structures, this would lead to more
better operation proccesses.
Turnaround and Innovation
II &III: Cutting down on all underutilized assets in the
company, which can effect other departments.
Turnaround and Innovation
II & III: Increasing the efficiency of operations by
duplicating or refining current operations.
Concentrated Growth
III: Building strong relationships with top-tier, diverse
technical universities supporting space systems. This can
secure the best talent for the company moving forward.
Grand Strategy Selection Matrix

40
Team B | MGMT 4500
corporate circles. Lockheed Martin could offer a graduated multifaceted bonus incentive
to all employees, which encourages networking with past coworkers, classmates, or
friends in the hopes of cultivating new business or new employees. Such a reward system
would facilitate new opportunities for the firm and offer incentives for employees to help
mind the company gaps by compensating an idea that becomes a revenue stream,
translates to efficiencies, or referred a new hire with a special skill set.
Each year the company could institute new parts of the incentive program, which
align with achieving specific long-term goals using special incentives targeted at involving
employees on all levels. Employees need to understand these are temporary incentive
programs offered as an extra bonus opportunity if their idea helps the company meet long-
term objectives; therefore, the period offered would be 3-5 years, which is long enough to
help the company meet their objectives. The expiration of the offer creates immediacy for
employees to participate in aiding the company in meeting their objectives.
Extra compensation could be offered to those graduates with special skills who
participate at their alma mater job fair or sponsor a Lockheed Martin event on campus.
Bonus compensation could also be offered for employees presented with the opportunity
to lecture, with compensation based on attendance, content, and company exposure.
Same for any employee published, with pay based on circulation, content, and company
exposure. Scientists, managers, or any employee who lectures or becomes published on
the topic of sustainability as it relates to Lockheed Martin could contribute to the overall
success of social responsibility as a long-term objective.
By using employee ideas, contacts, and interests to cast a wider social net,
Lockheed Martin creates more resources to help meet long-term objectives and create
more value with customers, employees, and the public.

41
Lockheed Martin currently uses a back-loaded compensation of 73% long-term
incentives based on a three-year cycle; however, since the company works on long
government contracts, it is recommended that the time frame for compensation be
extended from three years to five years. The purpose for increasing lag time is to extend
the measuring of results for executives compared against the bulk of lengthy contracts
fulfilled in a longer time period.
Many Lockheed Martin executives hold dual roles for the organization; for
example, Marilyn Hewson serves as CEO and Chairman of the Board and Bruce Tanner
serves as Vice President for the Aeronautics division and CFO. The most substantial
change would be to increase the pay for executives carrying more work-load with dual
roles from the 50th percentile to the 60th percentile. Only 37% of companies practice
separating the CEO from Board duties and there is little evidence that separating the roles
improves shareholder returns; therefore, it only seems appropriate to motivate the leaders
holding more responsibility for the company’s strategic planning and implementation with
more base pay (Charan).
STRATEGY IMPLEMENTATION
In its many years of operation Lockheed Martin Space Systems Company has proven
to have a very effective multi-divisional matrix structure. Since there are no real changes
that need to be made to their structure, Space Systems Company can use the current
structure to promote effective strategy execution in the following ways.
 Coordinate the business units of Space Systems Company to implement new
strategy execution.
 Focus on accountability of performance from the different business units.

42
Team B | MGMT 4500
 Retain functional specialization within each business division.
 Maintain specialized product differentiation while implementing more effective
knowledge sharing tools between the business units.
 Maximize effectiveness of functional management across divisions.
 Focus middle management on internal strategic issues and allow corporate
management to focus on broad strategic decision-making (Pearce & Robinson).
The same can be said about Lockheed Martin Space Systems Company’s
organizational culture. Space Systems has a very diverse and rich culture of employees.
There has been a push to hire and integrate women and many ethnic backgrounds into
the work culture. The company even has a diversity and inclusion board that ensures that
the corporation is creating the best
culture possible. The diverse culture
allows for new ideas, perspectives, and
methods to be integrated into Lockheed
Martin Space Systems Company. They
can use their current culture to promote
effective strategy execution in the
following ways:
 Maintain a culture that is focused on teams and not just individual work.
 Management and Leadership should represent and endorse Lockheed’s culture.
 Maintain ethical standards of Lockheed Martin and promote ethical standards of
employees.
 Hire diverse employees that are a good fit for Space Systems Company and allow
them to promote ideas.
“At Lockheed Martin, we’re at our best
when we bring talented people with
diverse capabilities and experiences
together to take on our customers’
toughest challenges. Embracing
diversity sparks creativity, generates new
ideas, and raises smart, insightful
questions. That’s when innovation really
takes flight.” – CEO of Lockheed Martin
Marilyn Hewson

43
 Reinforce Lockheed’s beliefs and values along with the mission statement to have
strong culture in the company.
 Maintain diversity and inclusion board and hold events and conferences for
employees.
Finally Lockheed Martin Space Systems Company has a very qualified and diverse
team of leadership and management that guides the company in strategic execution and
implementation. The company maintains a hierarchal leadership structure that oversees
all areas of the company. The main issue Space Systems faces is not in the quality of
their leadership, but the threat to loss of leadership though retirement. Much of
Lockheed’s leadership is at the stage in their career where they have a lot of experience,
but many of them will retire soon. Lockheed Martin can solve this problem and execute
strategy implementation by doing the following:
 Foster Leadership in younger employees through mentoring and programs.
o Future Leadership Development Program (FLDP)
 Recruit and Develop talented future leadership
 Maintain current Leadership structure
 Foster organizational culture through leadership
 Execute strategy implementation with a top down approach within leadership
STRATEGIC CONTROL
Our consulting team recommends Lockheed Martin continues to implement their
current Strategic and Operational Controls as is. In addition to those controls, our
management also would recommend an implementation control of reviewing this specific
strategic plan that has been outlined be scheduled for April 25th
, 2017 to reevaluate this
strategic plan. Meeting on this date will enable management to determine if certain

44
Team B | MGMT 4500
aspects of this plan worked and did not work along with decided what aspects should
continue to be implemented in the future.
In order to be more competitive, Lockheed Martin must use their current innovation
and produce similar technologies as Space X and Blue Origin to be a dominant
competitive force in the market. Their current forms of innovation allow Space Systems
to develop satellites at a lower cost, with better materials, and risk avoidance. This is a
great option for customers looking for a lower cost satellite that maintains good quality.
Recently however, Space X and Blue Origin have caught the attention of many customers
in the space industry by creating reusable rockets that maintain quality. These rockets
can drastically reduce the costs to the customer and cause them to use Space X and Blue
Origin products. Lockheed needs to use this reusable technology is a similar way to
remain competitive. They can achieve this by doing the following strategies:
 Acquire the smaller, Blue Origin, company through Horizontal Acquisition and
acquire their reusable rocket technology.
 Merge with Space X and form a dominant force in the Space industry.
 Invest resources in the development of reusable rocket technology without Space
X or Blue Origin influence.
 Create a partnership with either company, and use knowledge sharing to
implement the technologies into Space Systems Company.
CONCLUSION
Lockheed Martin Space Systems Company has established itself as a premier
organization in its field. In implementing the above recommendations, such as taking on
more risk entering into new markets, acquiring competitors, and enhancing its workforce,
Lockheed Martin will further maximize company and stakeholder value.

45
APPENDIX
SECTION 1
1A – INCOME STATEMENT
Year: 2010 2011 2012 2013 2014 2015
Net Sales
Products 36,380$ 36,925$ 37,817$ 35,691$ 36,093$ 35,882$
Services 9,291$ 9,574$ 9,365$ 9,667$ 9,507$ 10,250$
Total Net Sales 45,671$ 46,499$ 47,182$ 45,358$ 45,600$ 46,132$
Cost of Sales
Products (32,539)$ (32,968)$ (33,495)$ (31,346)$ (31,965)$ (32,006)$
Services (8,382)$ (8,514)$ (8,383)$ (8,588)$ (8,393)$ (9,011)$
Goodwill Impaiment charges -$ -$ -$ (195)$ (119)$ 0
Severence & Other Charges (220)$ (136)$ (48)$ (201)$ -$ (102)$
Other Unallocated costs (686)$ (1,137)$ (1,060)$ (841)$ 132$ 187$
Total Cost of Sales (41,827)$ (42,755)$ (42,986)$ (41,171)$ (40,345)$ (40,932)$
Gross Profit 3,844$ 3,744$ 4,196$ 4,187$ 5,255$ 5,200$
Other income, net 261$ 276$ 238$ 318$ 337$ 236$
Operating Profit 4,105$ 4,020$ 4,434$ 4,505$ 5,592$ 5,436$
Interest Expense (345)$ (354)$ (383)$ (350)$ (340)$ (443)$
Other Non Op Income (expense), net 18$ (35)$ 21$ 6$ 30$
Earnings from Continued Ops before Inc
Tax 3,778$ 3,631$ 4,072$ 4,155$ 5,258$ 5,023$
Income Tax Expense (1,164)$ (964)$ (1,327)$ (1,205)$ (1,644)$ (1,418)$
Net Earnings from Continued Operations 2,614$ 2,667$ 2,745$ 2,950$ 3,614$ 3,605$
Net (loss) earnings from Disc. Ops 264$ (12)$ -$ 31$ -$ -$
Net Earnings 2,878$ 2,655$ 2,745$ 2,981$ 3,614$ 3,605$
Earnings (loss) per common share
Basic
Continuing Operations 7.18 7.94 8.48 9.19 11.41 11.62
Discontinued Operations 0.72 -0.04 0 0.1 0 0
Basic earnings per common share 7.90 7.90 8.48 9.29 11.41 11.62
Diluted
Continuing Operations 7.10 7.85 8.36 9.04 11.21 11.46
Discontinued Operations 0.71 (0.04) 0 0.09 0 0
Diluted earnings per common share 7.81 7.81 8.36 9.13 11.21 11.46
Income Statement

46
Team B | MGMT 4500
1B – SPACE SYSTEMS FINANCIALS
1C – GRAND STRATEGY EXAMPLES
Product Development
• Revitalizing and polishing proven platforms is a dominant characteristic for
Lockheed Martin Space Systems. Through existing space technology, Lockheed
is offering greater connectivity and information around the world. In today's world,
this is not a necessity, it's a requirement in order to stay competitive. Lockheed
engineers work around the clock to ensure satellites are, "...resilient, affordable,
and flexible." This provides immense value to government and commercial
buyers. Since the release of Satcom-1 in 1975, Lockheed has launched more
than 100 commercial satellites. Building and modifying on existing frameworks,
Lockheed will continue the next generation of Geostationary Operational
Environmental Satellite-R series (GOES_R) weather satellites, Advanced
Extremely High Frequency (AEHF) communications satellites, and the newest
and brightest Global Positioning System (GPS) III satellites.
Year 2010 2011 2012 2013 2014
Net Sales 8,268$ 8,161$ 8,347$ 7,958$ 8,065$
Operating Profit (Loss) 968$ 989$ 1,083$ 1,045$ 1,039$
Deprec. & Amortz. 212$ 199$ 191$ 199$ 217$
Exp. PP&E 205$ 192$ 167$ 170$ 162$
Identifiable Assets
Total Net sales 45,671$ 46,499$ 47,182$ 45,358$ 45,600$
Year 2010 2011 2012 2013 2014
US Gov't 8,000$ 7,821$ 7,952$ 7,833$ 7,817$
Foreign Gov'ts 97$ 144$ 319$ 73$ 65$
Commercial 145$ 169$ 76$ 52$ 183$
LMT : Space Systems Division
Net Sales by Customer Category

47
Innovation
• Advancements in digital design and 3D printing have proven to reduce cost
cycles associated with payload deployment of satellites. This is huge for the
future of Space Systems at Lockheed Martin. Well-equipped Centers of
Excellence are steering next-gen, mission based payload deployment. Through
an upgraded A2100 satellite bus, Lockheed Martin is also merging the next wave
of communications to offer superior results to their customer base. Their
Advanced Technology Center (R&D) not only champions innovation, but
harnesses the power of invention to gain higher rates of customer acceptance. In
the words of Lockheed Martin, "We are inventing enablers that lead to
"generation after next" solutions and capabilities.
1D – CEO TARGET OPPORTUNITY MIX

48
Team B | MGMT 4500
1E – ORGANIZATIONAL CHARTS
SPACE SYSTEMS COMPANY

49
CIVIL SPACE

50
Team B | MGMT 4500
GEOSTATIONARY OPERATIONAL ENVIROMENTAL SATTELITE – R SERIES

51
SECTION 3
3A – IN-DEPTH ANALYSIS: REMOTE ENVIROMENT
The depletion of natural resources throughout the world has made the movement
towards renewable energy much more necessary. Oil companies have to look further and
drill deeper to find dwindling reserves of oil, meaning the cost of an average well has
doubled in the past ten years, while new mining discoveries have been largely flat despite
a fourfold increase in exploration costs. Additionally, congress created the renewable fuel
standard program in an effort to reduce greenhouse gas emissions and expand the
nation’s renewable fuels sector ("Renewable Fuel Standard Program"). Space systems
require a great deal of fuel in order to reach space, and fuel is becoming a more and more
expensive resource.
The upcoming presidential election is sure to play a large role in the political aspect
of Lockheed Martin’s remote environment. NASA is a large customer of Lockheed Martin’s
Space Systems division; however funding for NASA is at an all-time low creating a large
threat of loss of business to Lockheed Martin. Whoever wins the presidential election will
have some input into whether funding for NASA continues to decrease or if it takes a turn.
Currently the technological aspect of the remote environment is full of new
opportunities and threats to Lockheed Martin’s Space Systems. For example, NASA is
working with Made in Space to create an infrastructure to build systems in space rather
than launching them. In-orbit manufacturing and fabrication could revolutionize the design
of spacecraft and orbital technology creating a potential threat. However, this creates an
opportunity for Lockheed Martin to design their own in-orbit manufacturing and fabrication
process thus neutralizing the threat posed by robotic 3D printing processes currently being
developed.

52
Team B | MGMT 4500
One profound social change in recent years is the development and widespread
use of personal technology, such as smartphones. These new devices are deeply
ingrained in the current culture, and it’s near impossible to find an individual who doesn’t
use it in at least some form. Many of these technologies require effective space systems
in order to function. For example, Global Positioning System (GPS) technology is found in
everything from cell phones and wristwatches, to shipping containers and ATM's. Without
space systems such as GPS many of the things people use on a daily basis wouldn’t work.
This creates a large opportunity for Lockheed Martin as a creator of many of these vital
space systems. Lockheed Martin already takes advantage of this large opportunity by
developing and creating many of the space systems necessary for personal technology to
work.
3B – IN-DEPTH ANALYSIS: OPERATING ENVIROMENT
Labor
Due to their low cost initiatives, Lockheed Martin’s wages for those in Space Systems may
not be as competitive as those of other organizations in the industry. This can result in the
loss of capable employees, which are essential to success. This creates the threat of top-
performing employees choosing other Space Systems organizations over LM. However,
this also creates an opportunity for Lockheed Martin to expand their recruitment process
to overcome this threat. Lockheed Martin has a great reputation for being a leader and
pioneer in Space Systems; this reputation draws in many skilled personnel in the
surrounding community. There is not a shortage of engineers entering the workforce with
engineering bachelor’s degrees growing by 5.6 percent during 2011, reaching 83,001
(Yoder). Effectively marketing this reputation to potential employees may help them to
overlook the smaller salary especially when they are entry-level. Additionally, by
continuing to recruit college students and create programs for students as early as high

53
school Lockheed Martin sets itself apart from competitors. By maintaining their reputation
and continually recruiting new talent, Lockheed Martin can overcome the salary
differences in the industry by being the more desirable place to work.
Creditors
Due to Lockheed Martin’s broad portfolio of mature, profitable programs and favorable
competitive position they are able to maintain a mostly positive relationship with creditors.
Lockheed Martin currently has as a rating of Baa1. This is the eighth highest rating in
Moody's Long-term Corporate Obligation Rating. “Obligations rated Baa1 are subject to
moderate credit risk. They are considered medium grade and as such may possess
certain speculative characteristics” (Harvey). Creditors perceive the firm as having an
acceptable record of past payments creating opportunities to finance possible acquisitions
through debt. This creates an opportunity through a horizontal acquisition of a smaller
competitor such as Blue Origin. Doing so could enhance LM’s market share and generate
some new technology. Additionally, the creditor’s current loan terms are compatible with
LM’s profitability objectives ensuring that they will be able to maintain their competitive
position with creditors.
Suppliers
Lockheed Martin’s Space Systems Division relies on a variety of suppliers; however due
to fixed contracts they are not able to take advantage of some the most competitive
supplier prices in the market. Additionally, Lockheed Martin does not have significant
exposure to their suppliers. By further developing relationships with their suppliers,
Lockheed Martin could further develop their own 3D processes and digital design to start
manufacturing satellites in space, and potentially lower costs. Developing stronger
exposure to their suppliers would also help with manufacturing materials to be able to

54
Team B | MGMT 4500
continue to be at the peak of their innovative designs
Customers Profiles
Geographically, many of the customers who generate the most revenue for Lockheed
Martin’s Space Systems are located in North America. Being located in the United States
has allowed for Lockheed Martin to obtain a large amount of contracts and business with
the United States government. With the increase of technology that relies on space
systems, it is vital for the United States government to possess the highest caliber
technology. By continuing to maintain their reputation as the leader in space systems and
keeping prices competitive, Lockheed Martin can use the buyer behavior of the US
government to maintain these lucrative government contracts.
3C – FINANCIAL ANALYSIS
REVENUE

55
FINANCIAL RATIOS

56
Team B | MGMT 4500
BALANCE SHEET
ANALYSIS
a.) Current performance for A/R Turnover and days in collection have been worse than
in the past due to contract changes made by the government from a cost plus pricing
structure to a fixed price contract, which requires prior authorization for expenses. The
extensive policies used by employees helps navigate contractual obligations for fulfilling
work and billing appropriately. Other activity ratios, asset turnover, fixed asset ratio, and
inventory ratio have all dropped indicating lost efficiencies when using assets the past
year. This could be due to the cessation of contract overages.

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