The Mission and Vision of the Northrop Grumman Company - Essay Example

Introduction: This paper provides information about Northrop Grumman. This paper identifies the mission, vision and stakeholders of the company, and how they help in achieving efficiency and profitability of the company. This paper analyzes Northrop Grumman by using the Porters Five forces analysis, and the SWOT analysis. It thereafter identifies a strategy that the business should use in taking advantage of its strengths and opportunities, while limiting the threats and weaknesses that the organization faces. This paper also proposes the corporate and business level strategy that the organization needs to use, and it thereafter identifies the governance structure of the company. This paper also provides information concerning the ethical values of the company, and how it affects the organizations bottom line. Values, Mission and Stakeholders: Northrop Grumman is an American Multi-national company, specializing in the production of defense and aerospace facilities/ products. The company began its operations in 1994, through an acquisition of Northrop by Grumman. As of the year 2010, this company was voted as the fourth largest defense contractor in the world, and it employs more than 68,000 employees all over the world. The mission of the company is to be a leader in the production of defense and aeronautical technology. The mission of the company is also to satisfy the various needs of its customers through delivery and innovating high quality technological products, which are affordable (Hayden, Campbell and Cummins, 2010). The vision of the company on the other hand is to be a trusted and reliable supplier and producer of technologies and systems capable of protecting the country. To achieve this objective, the company aims to observe ethical values that guide defense contracting, promote innovation and collaboration amongst its employees and key stakeholders. The key stakeholders of Northrop Grumman are share holders, suppliers, employees, and the company’s customers, which are always security institutions of America, and American allies. These people have an impact on the general performance of the company; this is because the company aims at achieving profitability for purposes of satisfying its shareholders and customers (Hayden, Campbell and Cummins, 2010). The company also seeks to produce high quality defense technologies, for purposes of protecting the country and satisfying the needs of its customers. Production of high quality defense technology is part and parcel of the organization’s mission and vision, and hence the employees of the organization usually work hard, and are encouraged to be innovative for purposes of coming up with a technological system that will satisfy its customers. Five Forces of Competition: In order to effectively determine the corporate strategy of Northrop Grumman, it is important to analyze the company through five different arenas, namely, its competitors, potential of new companies/ entrants into the market, power of its suppliers, power of its customers, and threats emanating from substitute products. As a defense contractor, Northrop faces serious competition from Lockheed Martin, Raytheon and GE aviation (Hayden, Campbell and Cummins, 2010). For example, Lockheed Martin is also a large defense contracting company, with a worldwide presence. The company competes with Northrop Grumman for the same customers. For example, one of the customers of Lockheed Martin is the American military. Most revenues of Lockheed Martin’s came from the American military, which was 74% of all its revenues. Northrop Grumman also looks for such contracts from the American military, making Lockheed its direct competitor. Raytheon Company is another direct competitor with Northrop Grumman, having a similar capability with the company. The company has around 68,000 employees, and produces weapons and special mission aircrafts, such as the drones. The company is also the largest producer of guided missiles, giving it a competitive advantage over Northrop Grumman. It also competes for the same customers as Northrop Grumman, which is military and security institutions (Reddy, Appannaiah, and Sathyaprasad, 2010). As a democratic and liberal economy, there are chances that new defense contractors will always enter into the market. This is not beneficial to the company because it will lead to an increase in completion, and reduction of the organizations profitability. The American constitution advocates for a liberal economy, where it is the laws of demand and supply that rule the market. Emergence of new companies will mean that supplies will be high, leading to a reduction in prices. The suppliers of the business organization always consists of small businesses, and vulnerable groups such as the disabled, women, veterans, etc. These suppliers have a considerable influence on the pricing policy of the company. This is because the prices of their suppliers will be used in calculating the overall price of the organizations products (Hayden, Campbell and Cummins, 2010). Suppliers cannot influence other policies of the organization, such as its mission, vision, corporate or business strategy. The customers of the organization have an extensive influence in the manner in which the organization conducts its business affairs. This is because the products of the organization are always tailored to satisfy the various needs of its customers. Northrop Grumman recognizes that in order to succeed, it is important for the organization to satisfy the various needs of its customers. This will give the company an edge over its competitors. The operations of the company are also threatened by substitute products that are developed by their competitors. To limit this threat, the company seeks to encourage innovation for purposes of developing a high quality technological piece, and at an affordable price. On this note, the company relies on innovation and fair pricing strategy to beat off the threats brought about by substitute products. SWOT Analysis: The following are the SWOT analysis on Northrop Grumman (Grumman, 2014), Strengths: The company is a large organization and it therefore benefits from economies of scale. The company has highly skilled and efficient human resource personnel. The company is good at developing innovative products. The company has a large revenue base, which runs into billions of dollars. The company has a presence on almost all allied countries of the United States. It has formed strategic alliances with companies such as DHS systems. They use some of their technology to develop their products. Weaknesses: The managerial structure of the company is highly centralized. This makes the decision making process to be long. Depends heavily on military institutions for their market, i.e. their products cannot be used by civilians and this limits their market. Opportunities: With the development of new technology in IT and software development, the company can use such information to improve on their products, and develop lethal and more efficient weapons. Increased conflicts in Africa, Asia, and the Americas will increase the demands of the products of the company. There is the emergence of new American allies, and hence a potential market for the company. Threats: Violating rules and regulations by the arms regulation authorities in the United States can lead to the closure of the company. For example in 1998, the company was fined more than 15 million dollars for providing source codes used by interfaces found in Air Force One, to a Russian company. Increased competition from their competitors could make the company achieve losses, or fail to meet its objectives. Chances are high that the weapons they manufacture could reach into rogue and unstable regimes which present a threat to the American security system. Strategy: To capitalize on the strengths and opportunities of the company, the management of Northrop Grumman has to undertake the following; Develop an advertising strategy, that will make its target market to be aware of the kind of technologies, and products that the company produces. In advertising the services and products of the company, there is a need of using show rooms. The company should invite top military leaders to their show rooms, presenting to them a sample of their technologies and capabilities. Through aggressive marketing and advertisement, the company will manage to minimize the various threats and weaknesses that it faces. For example, through aggressive advertisement, the company might manage to acquire new markets, at the expense of its competitors (Reddy, Appannaiah, and Sathyaprasad, 2010). In these advertisements, the company must also denote that it seeks to observe ethics by following all the established standards and regulations set by the government. This is because government institutions will only work with organizations that are ethical, and reliable. Levels and Types of Strategies: There are two main types of strategies that the business organization can use for purposes of maximizing its profitability and competitiveness. The strategies are business level strategy, and the corporate level strategy. The business level strategies are the various actions that the business organization will take, for purposes of providing value to its customers, and gaining a competitive advantage over its rivals (Reddy, Appannaiah, and Sathyaprasad, 2010). This is by exploiting its core competencies, or strengths. The business level strategies that Northrop Grumman can use are low cost strategy, focus, and differentiation. Low cost strategy involves cutting down on the organizations operating costs, without compromising the quality of its products (Holder, 1998). The cutting down of costs will be reflected on the prices of the company’s products. Differentiation strategy on the other hand lays an emphasis on the development of unique products, that the various customers of Northrop Grumman will be willing to pay a premium price to the products under consideration. The third strategy is focus, and this involves focusing on the satisfaction of the needs of a particular market. For instance, Northrop Grumman should focus on satisfying the military needs of various allied governments, and that of the American government (Reddy, Appannaiah, and Sathyaprasad, 2010). It should not look for other markets, apart from the ones it has, and focusing on this market, will make the company to produce high quality products. Corporate level strategy on the other hand concerns itself with making strategic decisions that have an impact on the whole organization. Mergers and acquisitions, human resource management, allocation of resources and financial performance are examples of corporate level techniques. An example of a corporate level strategy the Northrop can use is referred to as value creating strategy. This involves developing measures aimed at outdoing competition, and increasing the market share of the business organization (Jackson, 2010). The use of these strategies aims at increasing the values of the organizations products, by taking advantage of its economies of scale. Key to this strategy is diversification of its products, and effective management of its human resources. The company should not only concentrate in developing unmanned aerial vehicles, but it should also develop other weapons such as sub-marines, fighter helicopters, etc. Outline of the Communication Plan: Background: This contains the reasons for developing the communication plan under consideration, and the purpose of the message. Objectives of the communication plan: -To raise awareness on the business and corporate level strategies that Northrop should use. Target Audience: -Key stakeholders of the company. Key Messages: -The business level strategies that the organization needs to use. These strategies are; a. Focus b. Cost Leadership. c. Differentiation. -The corporate level strategies to use. These strategies are; a. Diversification. b. Human Resource Management techniques. Channels of Communication: -Memos, -Newsletters -Website Evaluation: -The number of people who have accessed the information. Corporate Governance Mechanism: The control of the company occurs under two main levels, namely the corporate policy council, and the administrative unit headed by the Chief Executive officer. The corporate policy council consists of 13 members, and it is their duty to develop policies for the organization to implement (Grumman, 2014). The corporate Policy council is headed by the Chairman, who is also the president and Chief Executive Officer of the company. The administrative unit is headed by the chief executive policy, and it is responsible for implementing the various policies adopted by the corporate policy council. Leadership Effectiveness: The Leadership of this company is structured in manner that there is a chief executive officer, with many supporting offices surrounding that of the chief executive officer. For example, there is an office of the vice president who is in charge of government relations, the office of the vice president in charge of enterprise services, etc. In as much as the people occupying these offices are highly skillful, decision making process in the organization is slow (Kay, 2011). This is because before the decision is made, it must pass through a variety of offices for purposes of gaining approval. This is disadvantageous because an employee might be faced with an urgent situation that might require him or her to make a decision urgently. To improve on this weakness in leadership, the organization needs to create a work culture whereby everybody is responsible for his or her own work. People should make decision based on what is good for the company. The organization should give its employees a free hand in making decisions, as long as the decision under consideration will not negatively affect the company. Corporate Ethics: The business culture of Northrop Grumman is guided by doing the right thing, at whatever circumstances. This includes observing and following the law, being honest to customers, and encouraging its employees to act with integrity and honesty. The reputation of the organization as observing high ethical values is one of the greatest assets of the organization. On this basis, one of the most important ethical values for the company is to abide by the law, and follow the highest principles of integrity (Williams, 2013). For example, as part of the organizations effort to promote to act with integrity, the company decided to sponsor education in engineering, science, technology and mathematics. This was on September 18th 2013. This has an effect of improving the image of the company, as being corporately responsible. The result of a positive brand name would eventually lead to an increase in the sales and profitability of the business organization. Conclusion: Northrop Grumman is a multi-national company, operating in countries that are allied to United States. This paper manages to identify and effectively explain the mission and vision of the company, and how they affect the profitability of the business organization. Northrop Grumman specializes mostly in the production off defense materials, and its main strength lies in the production of unmanned aerial vehicles. However, the company needs to also strengthen its production of other defense materials for purposes of ensuring that it beats competition. References: Hayden, F. G., Campbell, E. G., & Cummins, S. (2010). The Ranking Of Contractors To The U.S. Department Of Defense According To Integrated Power Blocs Among The Contractors. Journal of Economic Issues, 44(2), 411-420. Holder, W. G. (1998). Northrop Grumman B-2 Spirit: an illustrated history. Atglen, PA: Schiffer Pub.. Jackson, R. (2010). 101 great fighters. New York: Rosen Pub.. Kay, L. (2011). The effect of inducement prizes on innovation: evidence from the Ansari XPrize and the Northrop Grumman Lunar Lander Challenge. R&D Management, 41(4), 360- 377. Grumman. (n.d.). Northrop Grumman Corporation. Northrop Grumman. Retrieved February 27, 2014, from http://www.northropgrumman.com/Pages/default.aspx Reddy, P., Appannaiah, H. R., & Sathyaprasad, B. G. (2010). Business management (Rev. ed.). Mumbai [India: Himalaya Pub. House. Williams, M. J. (2013). Contractors at war: the transformation of US expeditionary operations. Defense & Security Analysis, 29(2), 170-171. Read More