Northrop Grumman competes with many companies in the U.S. aerospace and defense industry and the information and services
markets for a number of programs, both large and small. In the U.S. defense industry, Northrop Grumman's primary competitors are
BAE Systems, Airbus Group (formerly EADS), Finmeccanica, Booz Allen Hamilton, and Thales.
Intense competition and long operating cycles are both key characteristics of the company's business and the defense industry. It is common in the defense industry for work on major programs to be shared among a number of companies. A company competing to be a prime contractor may, upon ultimate award of the contract to another competitor, become a subcontractor for the ultimate prime contracting company. It is not unusual to compete for a contract award with a peer company and, simultaneously, perform as a supplier to or a customer of that same competitor on other contracts, or vice versa. The nature of major defense programs, conducted under binding contracts, allows companies that perform well to benefit from a level of program continuity not frequently found in other industries.
The company's success in the competitive defense industry depends upon Northrop Grumman's ability to develop and market its products and services, as well as the ability to provide the people, technologies, facilities, equipment, and financial capacity needed to deliver those products and services affordably and efficiently. Like most of the company's competitors, Northrop Grumman is vertically integrated but also has a high reliance on the supply chain. Northrop Grumman must continue to maintain dependable sources for raw materials, fabricated parts, electronic components, and major subassemblies. In this increasingly complex manufacturing and systems integration environment, effective oversight of subcontractors and suppliers is vital to the company's success.
Similarly, there is intense competition among many companies in the information and services markets, which are generally more labor intensive with highly competitive margin rates and contract performance periods of shorter duration. Competitors in the information and services markets include the defense industry participants mentioned above as well as many other large and small entities with specialized expertise.
The company's ability to successfully compete in the information and services markets depends on a number of factors. The most important factor is the ability to deploy skilled professionals, many requiring security clearances, at competitive prices across the diverse spectrum of these markets. Accordingly, Northrop Grumman has implemented various workforce initiatives to ensure the company's success in attracting, developing and retaining these skilled professionals in sufficient numbers to maintain or improve the company's competitive position within these markets.
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