BAE SYSTEMS

Company Analysis: BAE Systems PLC



Table of Contents

Executive Summary2

Introduction3

Environmental Analysis4

Corporate Strategy Evaluation11

Financial Performance Analysis14

Recommendations16

Conclusion19

References20

Appendix22

Executive Summary

This report examines the BAE System effectiveness and prospects for its growth based on environmental and financial analysis of the company. BAE holds the second position in the global defence and security industry. Increasing regulation in the industry, capital intensity, specialized labour needs, and volatility of revenue pose certain implications for the company. BAE System has diversified portfolio segment; this include Platform Division, Services Division, Electronic System, and Cyber Intelligence. China and India are emerging as one of the leading markets for defence and security products that BAE offers, providing an attractive opportunity to the company to expand in international markets. BAE Systems has reported higher profitability in the year 2010, which enhances the company's capability to invest more funds in research and development. To gain a leading position in the industry, BAE Systems is in need to extend its commercial clients base.

Company Analysis: BAE Systems PLC

Introduction

BAE Systems PLC is an international security and defence company with workforce strength of more than 100,000 people. It is categorized under top 100 UK companies on the UK stock market. The Company provides a complete range of products and services for land, air, and naval armed forces. BAE system is well known in the market for its homeland security solutions, technology innovation, intelligence security, and system integration and electronics. In year 2010, company gained second position in the global defence market position (BAE Systems, 2010). Company serves its customers in more than 100 companies through multiple business divisions that include surface ships, electronic solutions, platform solutions, intelligence & security, maritime and submarine solutions, military air & information system, detica, land & armaments, and strategic capability solutions (BAE Systems, 2011a).

BAE Systems provides comprehensive support to its customer from designing of products to the manufacturing facility for surface ships, submarines, military aircraft, radars, avionics, space systems, electronic systems, C4ISR (command, control, communications, computers, intelligence, surveillance, and reconnaissance) systems, and weapon systems. BAE Systems operates through five reportable segments: land and armaments; electronics, intelligence, and support; programs and support; international; and HQ and other businesses (BAE Systems, 2011b). The land and armaments segment is engaged in the designing, improvement, and production along with service support for naval guns, combat armoured vehicles, tactical-wheeled vehicles, artillery systems, missile launchers, and munitions.

The land and armaments segment is engaged in five businesses, comprising the products group global combat systems, global tactical systems, US combat systems, and survivability and security systems. The company operates in more than 30 locations that include UK, US, Saudi Arabia, India, Australia, South Africa, and Sweden (BAE Systems, 2010). The programs and support segment is a major contributor to the UK defence, with the UK Ministry of Defence being its key customer. It is engaged in maritime and cyber and intelligence activities. This segment comprises five businesses, comprising BAE Systems surface ships, Detica, Integrated System Technologies, military air solutions, and submarine solutions (BAE Systems, ...