Contextualized Analysis of BAE Systems

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CHAPTER 1: OVERVIEW OF THE COMPANY

Despcription of the Company

BAE Systems is engaged in the development, delivery, and support of advanced defense and aerospace systems ('BAE SYSTEMS - Overview', website). The company designs, manufactures, and supports military aircraft, surface ships, submarines, combat vehicles, radar, avionics communications, electronics, and guided weapon systems. It is headquartered in London, the UK and employs about 98,200 people (Wachman, 2002, website).

The company recorded revenues of £22,392 million (approximately $34,602.4 million) during the fiscal year ended December 2010 (FY2010), an increase of 1.8% over FY2009. The net profit was £1,052 million (approximately $1,625.7 million) in FY2010, as compared to a net loss of £67 million (approximately $103.5 million) in FY2009 (Norton-Taylor, 2002, website).

Company Perspectives

BAE Systems is a contractor and systems integrator for the global defense and aerospace market. The company designs, manufactures, and supports military aircrafts, surface ships, submarines, space systems, radars, avionics, C4ISR (command, control, communications, computers, intelligence, surveillance, and reconnaissance) systems, electronic systems, and guided weapon systems (Hildyard, 1999, website). The company is one of the leading defense contractors in the UK and the rest of Europe, especially in military aircrafts, naval systems, and defense electronics and avionics. Its clients include the defense departments of the US and the UK.

BAE Systems operates through five reportable segments: land and armaments; electronics, intelligence, and support; programs and support; international; and HQ and other businesses. The land and armaments segment is engaged in the design, development, production, and service support of armored combat vehicles, tactical wheeled vehicles, naval guns, missile launchers, artillery systems, and munitions (Amnesty International report, 1999, website). This segment was established in 2005 from the newly acquired United Defense and the existing Land Systems (formed by the integration of RO Defence and Alvis) (Hirst, website).

The surface ships business is one of the UK's leading providers of surface ships and through-life support. It also offers warships and innovative naval surface ship support. Detica is a business and technology consultancy specializing in helping clients collect, manage, and exploit information to reveal actionable intelligence (BAE SYSTEMS, website). Integrated System Technologies delivers mission systems and information management solutions across the naval, joint, air, and land market sectors; whereas military air solutions is a through-life business delivering advanced military air capability to its customers in the UK and overseas. The submarine solutions business designs, builds, and delivers preliminary in-service support for Astute class submarines.

The international segment comprises the company's businesses in Saudi Arabia, India and Australia, together with interests in the pan-European MBDA joint venture and Air Astana. It has a 37.5% interest in the pan-European MBDA joint venture, 26% stake in Defence Land Systems India, and 49% stake in Air Astana (CAAT, 2002, website). BAE Systems provides aircraft, associated hardware, support, infrastructure, and manpower training for the Royal Saudi Air Force and Royal Saudi Naval Forces. BAE Systems Australia works as the capability partner to the Australian Defence Force. The company's subsidiary, MBDA (based in Germany), delivers products such as Brimstone air-launched anti-armor weapons, Mica air-to-air ...