Introduction
Understanding the company’s opportunities and threats is fundamental for stakeholders, such as potential investors, creditors, customers, and regulatory authorities. Both opportunities and threats are external factors that influence a business’s way of doing business. Opportunities are positive factors available to a business from outside, and the business ought to claim them to gain the advantage they present to the firm. On the other hand, threats are external forces outside the scope of business operations and affect how the business does things. This paper aims to identify the potential opportunities and threats for companies Lockheed Martin inc, AECOM, and General Dynamics.
Lockheed Martin Inc. was founded on August 16, 1912, by founder Glenn L. Martin and is located in Los Angeles, California. Martin was residing in a rented church where he created his first plan, a risky and innovative new aircraft design (Lockheed Martin). In the first quarter of 2023, the company generated revenue of $ 15.13 billion. Second, AECOM was founded on April 6, 1990, and its stock symbol is ACM and recently announced a cash dividend of 0.18 with an ex-date of July 2023. In 2022, the total revenue was $ 13,148 182 with a total asset of $ 11,139 315. Third, General Dynamics Corporation, GD, was incorporated in 1952 and provided services to the aerospace and defense communities. The company operates globally in the US, Canada, Mexico, Spain, Switzerland, and the UK. Total revenue in 2022 was $ 39,407,000, and total assets of $ 51,585,000. Recently announced a cash dividend of 1.32 with an ex-date of July 6, 2023.
Opportunities
Lockheed Martin Inc. experiences several opportunities during its operations. In the space industry, there are emerging economic opportunities, which include a decrease in the launch costs, advancement in technology, and an increase in public sector interests’ positions (Thompson & National Defense Univ Norfolk Va., 2021, p.22). Based on recent trends, the decrease in significantly higher launch costs, and essentially obstacles to industry players, are decreasing rapidly. Moreover, the growing interest from the public sector is a step towards the company expanding its financial projections to hit $ 1 trillion by 2039, as shown by a huge rise from $350 billion in 2020. Second, increased agreements in both national and international markets attain a significant boost, hence opening new potentials that had not been realized (Thompson & National Defense Univ Norfolk Va., 2021, p. 23).
Second, AECOM’s opportunities to steer its future growth include expansion across Asia by acquisition. Recently the company acquired KPK, a consultancy firm in a line of construction cost, contract, and project management with operations in Asia (railway Gazette International, 2010). Second, AECOM’s entering new contracts and agreements to improve its revenue (Brunt & Casey, 2022, p.169). Third, AECOM’s acquisitions can potentially boost the company’s reputation and service portfolio. The company’s strategic plan and future growth target organic expansion; hence merging and acquisition enable the company to increase revenue.
Third, General Dynamics’ opportunities for future growth and expansion include an increase in the global market based on defense and aerospace, particularly in China and India. Second, is a general increase in expenditures incurred by the US and global market players. Lastly, the industry is experiencing the highest pecking order backlog accumulated from 2008, which must be provided; hence the company needs to tap these advantages for its growth.
Threats
Lockheed Martin Inc. encounters several threats during business operations that adversely affect it. First, their global trade barriers are experiencing significant changes, such as easing the entry requirements. Second, governments across the globe are significantly cutting defense budgets; hence company sales are significantly reducing. Third, the company is experiencing stiff competition from competitors, including Boeing, BEA Systems, and General Dynamics, which significantly reduces revenue sales.
Second, AECOM experiences stiff competition from the industry players, which has the effect of downsizing the company’s profitability and experiencing a decline in sales (Jemiluyi & Jeke, 2023, p.2). Moreover, there is an increase in minimum wage rates for compensation to the staff in countries such as China at $ 15 per hour, which asserts pressure on the company’s profitability. Lastly, seasonal demand for the company’s most profitable products and services, in case of eventualities at the peak season, can resonate with the company’s low profitability in the financial year.
Third, General Dynamics is exposed to external threats that may adversely influence business operations. During the company’s operations, it has been exposed to numerous lawsuits and regulations from the government that adversely affect the revenue streams. The laws suit increases the operational expenses since the company is mandated to pay its lawyers to defend itself in a court of justice. Moreover, the possibility of decreasing expenditures by the government lowers the sales volumes, and revenue generation will decrease rapidly. Lastly, the digitalization of services exposes the company to cyber security threats which may significantly affect the operations in case of an eventuality (Alawida et al., 2022, p. 8183). Consequently, companies such as General Dynamics are forced to increase their expenses to cushion from cyber security threats.
Analysis
The opportunities present the company with room to expand its market, enabling it to increase its sales volume and profitability. In the case of Lockheed Martin Inc., it can minimize the costs of operations hence increasing its profitability (Wood et al., 2021). Consequently, increasing profitability allows the company to gain confidence among current and potential investors. Moreover, the company can expand the market to international players through various agreements with industry players.
Second, AECOM’s potential value gained is increasing its international space through new markets, which boosts sales volume and profitability. The acquisition and mergers of various companies increase revenue streams, hence boosting profitability. Investors are keen to explore the prospects of a company before making investments. Positive growth means that the company is focused on greatness.
Third, the opportunities for General dynamics are essential because they impact the company’s capacity to increase sales by tapping into the new global market (Phiri, 2020). Every firm’s goal is to increase its market share because it means its sales and profits would generally increase. An increase in the firm’s profitability creates a positive signal to investors, leading to an increase in capital to aid the operations and expansions.
On the other hand, Lockheed Martin Inc., AECOM, and General Dynamics are impacted adversely by external forces beyond their control. Lockheed Martin Inc. encounters threats that lead to high financial losses. High competition leads to low sales volume despite the high operational costs incurred, which allows the company to lose. Similarly, the threats severely impacted AECOM’s revenue generation since it declined due to increased competition. Fluctuations in minimum wage rates across different geographical areas where the company operates complicate the operations of the company.
Moreover, General Dynamics experiences different levels of severances based on each treatment and which have financial implications. For instance, the lawsuits increase operational expenses, lowering the company’s profits and reputation risks exposure. This is because litigations against the company expose the firm to financial losses. Cyber security concerns in modern society are becoming a pressing matter to the company’s operations and can be severe. Since the company has embraced its digitalization in the services delivery and operations wise, it should be worrying about the issues related to cyber security.
Conclusion
In conclusion, analyzing a company’s opportunities and threats is a common practice in the business. Businesses use opportunities to determine the aspects they can utilize to grow their market share. Moreover, they also analyze their threats to determine how their prospects for growth are adversely affected by external forces. They aid in making sound decisions making on available investment opportunities.
References
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AlSuwaidi, E., AlGhfeli, G., AlKaabi, M., AlDaheri, A., AlShamsi, R., AlQemzi, K., & Nobanee, H. Financial Analysis and Performance Evaluation of Lockheed Martin Corporation (LMT). From https://www.researchgate.net/profile/Haitham-Nobanee/publication/358581195_Financial_Analysis_and_Performance_Evaluation_of_Lockheed_Martin_Corporation_LMT/links/620a26a57b05f82592ea6b6b/Financial-Analysis-and-Performance-Evaluation-of-Lockheed-Martin-Corporation-LMT.pdf
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Lockheed Martin. (n.d.). Our history. Lockheed Martin. https://www.lockheedmartin.com/en-us/news/features/history.html
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Thompson, D. L., & NATIONAL DEFENSE UNIV NORFOLK VA. (2021). Economic Effects of Weaponizing Space: A Modified SWOT Analysis. From https://apps.dtic.mil/sti/citations/trecms/AD1153960
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