Northrop GrummanPorter 5 Forces

Ruben Serrano, Steven Chan, Chris Nguyen, Kathy Suria

Competitive Rivalry

• Oligopoly Market

• Sustainable Competitive Advantage through Innovation

• Competitive Strategy through Diversification and Collaboration

Products and Services

• Naval (Cleveland Ship LLC)

• Aerospace (Boeing, Lockheed Martin)

• Radar and Sensors (General Dynamics)

• Other Services ( IT, Technical Services) (Base-X, Xe Services LLC)

• Subsidiaries and Partners

Buyer Power

• United States

• Federal -    Military 

• State -   DMV

• Local -    Law Enforcement

(Domestic)

Control OverQuantity, quality, length of time for contractPrice - budgetsQuality - standard testingDesign                            *Training PersonnelMaintain equipment through contracts - 8 year contracts

Contract

Buyer Power

• NATO

• Foreign Countries

• ITAR

(International)

(International Traffic in Arms Regulations)

Supplier Power• International Companies (Switzerland, France,

Canada, Italy & Australia)• Local Companies across the U.S.

- Sub-contractors (Smaller private companies)

• Use of Small businesses as well as Big businesses• Suppliers sectors: Naval, Aerospace, Electronic

Systems, Information Systems and Technical Services.‣ Ex. Aerospace

- LAI International (airframe components for the F-35 Joint Strike Fighter)

- PPG (PPG provides transparencies, coatings and sealants for the B-2 stealth bomber and E-2D Advanced Hawkeye aircraft)

• COTS (customer over the shelf) Laptops, Monitors, Servers, Software (Operating systems, Proprietary in-house applications, Enterprise Management Systems, Biometrics Data-housing)

• Supplier power is weak

- Not the only supplier; Many substitutes

- Switching costs are low

- Brands are not powerful

- Hundreds of suppliers

- Suppliers do not have capacity to enter NG’s Market

- NG has control:

‣ Quantity, quality, contract, price, design

Threats New Market Entrants

• Facing  pressure  from  newly  formed  Cleveland  Ship  LLC  (company  formed  by  staff  from  many  Cleveland  Businesses)

• Cleveland  Ship  LLC  has  offered  to  purchase  en?re  Northrop  Grumman  Shipping  building  outright

• ‘Mul?-­‐billion  dollar’  business

• Defense  Finance  Bill  in  place  by  Senator  Mary  Landieu  for  Navy  to  purchase  replacement  vessels  from  Avondale  (owned  by  Northrop  Grumman)

• Threat  to  Infrared  Business  division  (IRCM,  infrared  countermeasure)

• Northrop  owns  20  percent  of  IRCM  market

• Facing  Threat  from  ITT  corp.  (founded  as  Interna?onal  Telephone  &  Telegraph  in  1920)  

• Rela?vely  old  company  that  is  diversified  but  specializes  in  water  and  fluids  management

• Chris  Carlson  director  for  domes?c  business  claims  ‘lots  of  untapped  technology’

• Claims that incumbents such as Northrop Grumman have ‘not been taking advantage of current technology’

• Long start up process for IRCM business makes it difficult for new entrants

• Jack Pledger development director for Northrop Grumman “it takes about 10 years” to break into IRCM business

Threat of Substitutes

• Unmanned Aerial Vehicles (UAVs)

• Cyber Warfare - US Cyber Security Team

• DARPA (Defense Advanced Research Projects Agency)

• Hand of God

Thank You