Strategy & Competitive Advantage

Missile Systems

• • Lockheed provides crucial missile systems integral to aerial defense

  • PAC-3 and THAAD

  • Both missile defense systems play key roles in missile interception and defense deterrent

Aerial and Space Systems

• • The F-35 is a state of the art manned aircraft that is known for its stealth capabilities and advanced avionics

  • Allows for advanced combat missions and maintaining air superiority

  • The C-130 Hercules is a vital transport aircraft, crucial for mission support and and logistics

  • Lockheed's satellite systems also play key roles in communication, detection and Surveillance

Research and Development

• • The core of Lockheed's innovation strategy

  • Heavily invested in advanced tech such as AI and Autonomy

  • Focused on creating next generation defense systems to adapt to evolving threats

  • Lockheed has committed to groundbreaking advancements such as directed energy systems

  • R&D commitments ensure that Lockheed remains at the forefront of the defense sector and is capable of meeting future military requirements

Government Contracts

• • A Substantial portion of revenue is achieved through defense contracts 

  • Partnerships with NASA for space exploration

  • Such contracts require delivery of high quality and innovative solutions 

 International Collaborations

• Lockheed's strategic international collaborations allow them to enhance their presence in Global markets

• Countries such as Australia and India have engaged with Lockheed for Military systems and aircrafts

• Reinforces role as global defense leader by aligning its capabilities with the defense needs of allied nations

Supply Chain Management

• Lockheed employs a multifaceted approach to ensure timely delivery of components

• Mitigates procurement and production risks by establishing strong relationships with suppliers

• Implements advanced technologies in logistics to help streamline operations and improve transparency

The 2025 sustainability management plan has four main goals:

• Modeling Business Integrity

Ethical Business Practices

Anti-bribery/Corruption 

• Advancing Research Stewardship

Counterfeit Parts Prevention

Energy Management

Hazardous Chemicals

Resource and Substance Supply Vulnerability

• Fostering Workplace Resiliency 

Workplace Safety

Workforce Representation

Harassment Free Workplace

• Elevating Digital Responsibility 

Intellectual Property Rights

Artificial Intelligence

Data Privacy and Protection

Lockheed's ESG risk score is 28.1, the score is comprised of three individual risk scores which are Environmental, Social, and Governance

Environmental

• 7.9

Social

• 14.1

Governance

• 6.2

Lockheed has committed to achieving more sustainable outputs going forward, but their net impacts are what hurts them right now. Their impact ratio is at -247.7%, meaning any positive objectives they set to achieve, are offset by their negative outputs. The main reason for this is that they are a defense contractor who's products are used to harm others or forcefully protect our nations best interests. While they make ground breaking advancements, it is hard to make an argument that their products positively impact the greater good of society and sustainability. 

Order Backlog

• Lockheed had considerable order backlog over the past few years and saw growth in each of its product segments. 

• The company expects to recognize more then 67% of their order backlog as revenue over 24 months

R&D

• Strong focus on R&D allows Lockheed to be a first mover in the aerospace and defense market

• Focused on developing new technology and enhancing existing tech to meet changing market demand and customer needs

Liquidity Position

• Current ratio of of 1.13 ensures the company's robust financial position and ability to meet short term obligations

• Current ratio increase was due to an increase in current assets

Dependence on the U.S.

• A significant portion of Lockheed's revenue is dependent on the U.S. Government

• Lockheed's operational and financial performance could be subject to risk as they can be subject to the economic and geopolitical risks associated with the U.S.

Financial Performance

• Lockheed has not seen steady increases in financial performance over the past few years, with some years prior having greater revenue then the current fiscal years. 

• This was due to decreases in sales in Rotary and Mission systems, Missiles and Fire control, and the Space Segment

Partnerships and Agreements

• Lockheed has worked to create new partnerships to develop newer missile systems and transfer technology

• Microsoft and Lockheed partnered to create the next generation of technology for the department of defense

• Lockheed has many competitors in which they can partner with to share technology and create cutting edge products

New Contracts

• In November 23' Lockheed received a new contract to produce a submarine ,which opens new doors for a broader range of contract revenues

• New contracts with the military allow for Lockheed to continue revenue growth and expand operations

Military Aircraft Engine Market

• By 2028 the global military aircraft engine market is expected to grow to $16.7 billion, with the U.S. having a 37% market share

• This is an area of business Lockheed can expand into, as they don't produce aircraft engines

Global Helicopter Market

• The global commercial helicopter market is expected to expand to $10.1 billion by 2028

• Lockheed has a dominant rotary business, and can be expected to benefit from the increase in market size

• The growing use of helicopters in different sectors, such as medical emergency services, law enforcement, and VIP & corporate transportation is aiding the growth of commercial helicopter market

Technological Changes

• Lockheed operates in a highly competitive market which is subject to rapid technological changes

• The company's future performance relies on its capacity to recognize emerging technological trends

Intense Competition

• Increasing competition will force Lockheed to invest heavily to maintain market share

• Players from emerging countries are competing harder to gain market share

Government Regulation

• Government contracts are subject to intricate procurement laws and regulations

• Frequent changes in contract terms could affect operational stability and company growth

Lockheed faces a high level of competition from companies like Boeing, General Dynamics, Raytheon, and Northrop Grumman. The industry itself faces a high level of competition for defense contracts and the need for constant improvement

There is a low threat of new entrants, due to the high barrier of entry into the aerospace and defense industry. The barriers include sufficient capital requirements, regulatory standards, and the need for advanced technology. 

While Lockheed works with thousands of suppliers, they only rely on a limited number of suppliers for critical components. The long term contracts and high cost of switching suppliers help mitigate the power of suppliers

Lockheed's primary customers are government agencies, specifically the Department of Defense. The buyers have large bargaining power due to their large purchase volumes and critical nature of defense contracts. 

There is a relatively low threat of substitutes as the aerospace and defense industry is very specialized. The high cost and complexity of developing alternative technology reduces the threat of substitutes.