Case“The Last Supper”

by Kent Kresa

What is a CEO’s job?

• Maximize shareholder value

What Drives Strategic Actions

Environment

Specific Options Available

Perceptions of Future Market Place

Early 1990’s – Defense Environment

• End of Cold War

• Peace Dividend

• Last Supper

• DoD procurement budget decline

• New weapons technology emphasis

• Wall Street pressure on defense firms

The World Had ChangedThe World Had Changed

Strategic Options – Early 1990’s• Shrink in place

• Sell off programs and businesses

• Merge with another military aircraft manufacturer

• Make strategic acquisitions to reposition company in defense growth areas (adding more value over the parts; add market shares, look at industry future; go after other market segments)

Northrop Grumman Merger & Acquisition History

Grumman CorporationGrumman Corporation (Integrated Systems)(Integrated Systems) Vought AircraftVought Aircraft (Aerostructures)(Aerostructures)

19941994

Westinghouse Electronic Systems GroupWestinghouse Electronic Systems Group (Electronics)(Electronics) AlliedAllied –– soldsold (Truck Bodies) (Truck Bodies) LogiconLogicon (Information Technology) (Information Technology)

INRIINRI (Information Technology) (Information Technology)

California MicrowaveCalifornia Microwave (Electronics)(Electronics) Data Procurement CorporationData Procurement Corporation (InformationTechnology)(InformationTechnology) Ryan Aeronautical Ryan Aeronautical (Integrated Unmanned Systems)(Integrated Unmanned Systems)

1996199619971997

19981998

19991999

20002000

20012001 Litton Industries Litton Industries (Electronics, Information Technology, Ships)(Electronics, Information Technology, Ships) Newport News Shipbuilding Newport News Shipbuilding (Ships)(Ships) EIS of Aerojet EIS of Aerojet (Electronics)(Electronics)

Comptek Research Comptek Research (Information Technology)(Information Technology) Sterling Sterling (Information Technology)(Information Technology) Federal Data Federal Data (Information Technology)(Information Technology) NaviaNavia (Electronics) (Electronics) Aerostructures – soldAerostructures – sold

20022002 TRW TRW (Satellites, Electronics, Information Technology)(Satellites, Electronics, Information Technology)

Ideally Aligned for Future Defense Needs…21st Century

Defense Needs

• Large-Scale Integrated Systems

• Design and Manufacture of Sophisticated Electronic Sensor Systems

• Naval Shipbuilding & Propulsion Systems

• Air Vehicle Design / Systems Integration

• Stealth Technology

• Information Operations

• Navigation & Guidance Systems

• Space Systems

• Lasers

Aircraft Carriers, Attack Subs, B-2, F/A-18, F-35, Destroyers,

Amphibious Assault Ships, ICBM

Satellites, JSTARS, E-2C, Guardrail, AWACS, Hunter, Global Hawk

F-22, F-35, F-16, Longbow, B-1B, Air Defense Radars, LITENING

Electronic Warfare Aircraft, Radar and IR Jamming Systems

Intelligence, Infrastructure Protection, Information Assurance, Advanced EHF, Milstar, Deepwater

STSS, SBIRS High, Integrated ISR, Battle Management,

Laser Weapons

GLOBAL FORCE PROJECTION / PRECISION

STRIKE

SURVEILLANCE

TARGETING

SURVIVABILITY

INFORMATION WARFARE

MISSILE DEFENSE

Core Competencies Programs

HOMELAND SECURITY

commercial

• Hush hush

• Resources

• Mentality

• Customers

• Scientists not entrepreneurs

• Advertising

• Costs

Top 3 Lessons

• Ethics: honest, open

• Good communication: communicate your vision, technical issues, problems

• Vision: be prepared to take a position and follow through; have the courage to change

Any issues with Aerospace?