Curtiss Wright Corporation Busines Report

Executive Summary

With the advent of the Informational Era, one of the leading United States and global aerospace industry developer and manufacturer, Curtiss Wright is taking a multiple set of composite and integral strategic decisions to guarantee that the company is developing organically through brand-new innovative approaches used by the business giant.  Apart from its close competitors, the company is reported to cultivate research-oriented approach of the company development (Santos, 2010), with the modern intellectual-based technologies being the core of the technological advancements introduced by the company.

The aim of this report is to analyze the internal and external financial, legal and organizational spheres of the targeted company. Specific emphasis has been made on  the PESTLE analysis of the firm’ macroeconomic structure, which is followed by the industry analysis and industry attractiveness evaluation.  Detailed SWOT analysis is provided in this report together with a comparative study with the business activity of the closest competitors of the operable business fields of the company. The third chapter of the report concludes on the general business environment , attractiveness for the prospective investors of the company, assesses the research and innovation-oriented strategies currently followed by the company , provides recommendations and counseling for the managerial departments of the company to accomplish the strategic goals of the firm and focuses on the brief summary of the business activity of the firm.

Company Profile

General Information

With the advent of the millennium era, the company turned into one of the largest holdings of the United States of America, especially having merged with Penny & Giles in 2007 and acquired Hybricon Corporation in 2010 ( the price of the transaction was reported to be $ 19 million ). 2011 was remarkable due to the purchase of the Ireland based Acra Control for $ 61 million (2010-2011 financial statements of the corporation).

Nowadays, the company is located on Parsippany, state of New Jersey, the United States of America (Santos, 2010).

Strategic Issues of the Company

Having evaluated the performance of the company within the latest decade, the one shall reach the conclusion that the firm´s most important strategic decision has been taken in the sections of financial management and innovational paradigm of the company. These aspects have been subjected to analysis in this paper.

Areas of Operation and Company Structure

Nowadays, the discussed firm operates primarily in the exploration of aerospace, defense, nuclear power exploration and generation, alternative energy sources research and generation, oil and gas towers installation, service and maintenance and related transactions, automobile industry and related supplies procurement ( House, 2005).  The company also provides supplies and technical maintenance for the production of the personal civil and military arms.  The main customers of the company are the United States government, the United States General Staff and the United States Armed Forces, the United States Navy and the National Aerospace Agency.

The main products manufacture by the productive facilities of the company are the metals ,  drive censor elements, pumps and valves, generators and motors, various instrumentation and actuation and the related supplies and equipment(Elscherm, Young, 1998).

Structurally, the corporation consists of three independent, composite business units, i.e. Curtiss Wright Metal Treatment Co., Wright Aeronautical Co., Curtis Wright Flow Control Co. and Curtis Wright Motion Co.

The pending CEO of the corporation is Martin R. Benante, in 2012 the company was reported to employ 7 000 people and the revenue for 2012 accounting year was   $ 2, 6 billion. 

Macroeconomic Environment Analysis of the Company

The present PESTLE analysis is aimed to evaluate the role of the political, economic, social ,technological, legal and environmental factors on the accomplishment of the strategic goals encapsulated in the Articles of Association of the company.

Politically, the company is independent and free of bias (Santos, 2010. The key people of the company support neither the Democrats, nor the Republicans. However, the political aspect is becoming tremendously important for the effective performance of the discussed business entity, since the political entities, namely the United States Congress and the Internal Revenue Service in close cooperation with SEC determine the tax policy of the country. In 2010, the Tax Code of the USA was subjected to significant amendments by the administration of the President Obama and IRS obtained specific powers to collect taxes and to monitor the financial activity of the enterprise. Nowadays, the company is reported to deduct 13% of all revenues as different taxes and other obligatory collection to the federal and local budgets annually (Gunston, 2006). Another important aspect in this context is the fact that the political course of the country directly determines the amount of the revenues accrued by the firm. To be more exact, political analysts report that the Republicans are more favored to active military external policy. The armory supply contracts are concluded with other states, as well as the armory arsenals of the United States Armed Forces are replenished. The amount of the state contracts obtained by the firm respectively increases (in 2007 43 % of the accrued revenues were due to the state-issued contracts). Besides, the state restrictions and embargoes imposed by the US Congress on specific countries exercise direct effect on the performance of the company. E.g.  the IRS prohibited the firm to sell civic aviation supplies to Southern Sudan in 2009 due to the laid embargo.

Economically, the performance of the company is dependent on the exchange and interest rates, inflation growth and general economic enhancement or deterioration.  The increase in the abovementioned determinants generally have a negative impact on the revenues accrued by the firm due to the fact that they are decreased significantly.  The rise of the interest rates inevitably leads to the decrease in the rise of the company (Porter, 2008).  In 2011 the increase in the EURO /US exchange rates on almost 3% impacted the turnover between the company and the European contractors. The supplies to Europe were 5% curtailed ever since.

Social factor is not the most important one in this paradigm. Since the vast majority of the company customers are public entities, the social traits of the society are among secondary determinants of the company activity. However, they shall be nevertheless considered, because social processes of the community affect the political ones, which have direct influence. For instance the protests against the military campaign in Iraq led to the decrease in the state military orders.

Technologically, the firm is very dependent on the technological evolution. The discovery of the new approaches and technological advancements condition the elaboration and creation of the new goods manufactured by the firm.  The technological sector is the most heavily invested sector of the company ( 21 % of the entire revenues collected by the firm are channeled to the technological research area). Moreover, innovation accomplishments of the research institutes of the company contribute to the market prosperity of the company and make it competitive. The company is reported to use its own research agencies, as well as it recourses to the outsourcing agencies.

The legal aspect of this paradigm is definitely the most important one alongside with the economic determinant. The area, in which the company operates has the most intricate and sophisticated legal framework, since it concerns the defense and aerospace industries. The activity of the firm is constantly and meticulously monitored by the state experts. In 2009 the 74% of the company output was tested and probed by US controlling authorities.  Moreover, the company is strictly subjected to the activity of the US antitrust laws (House, 2005).

The environmental aspect of the firm’s activity is closely connected with the legal sphere and with the promulgated social responsibility of the firm.  The company is legally mandated to observe the existing environmental standards and to reduce the carbon dioxide atmosphere emissions on 9% annually (Santos, 2010). The company is as well expected to reduce the ecologically detrimental substances emissions.

Industry Analysis (Porter’s Five Forces Analytical Framework) and Industry Attractiveness

The following evaluation of the internal and external factors is used to determine the general profitability of the industries in where the company operates. The criterions of the analysis are based on the paradigm of Michael Porter and are aimed to evaluate the microeconomic aspects of the firm (Porter, 2008).

The Threat of the New Competitors Advent

This spectrum of the analysis evaluates the probability of the new market entrants. Considering the scope and the scale of the business, the difficulty and the amount of the financial and technological resources needed to establish a similar business, it is highly improbable that a competitive business unit will be installed in the foreseeable future. The only possibility involves the technologically oriented “boutique” firms, operating in the research sector. With regard to the long term partnership of the corporation with the national governments and corporate contractors, the emergence of the competitive competitors and the market displacement of the company are highly improbable (Santos, 2010).

Threat of Substitute Products and Services Advent

Contemporarily, it is evident that the commodities produced by the company cannot be replaced by the available alternatives. In particular, the aerospace and military market of the United States and worldwide is practically monopolized by the firm. Other areas of the company activity are partially imperiled by the activity of the competitors and newly-incorporated research agencies. But this possibility is reported to be hypothetical, since no feasible alternatives currently exist on the market.

Customers Bargaining and Purchasing Power

The buyers are dependent on the current micro and macroeconomic factors of their own financial environments. Their behavior is dictated primarily by the information availability, advantages of the offered product and other factors.

The major customers of the targeted business entity are large scale transnational corporations and states (Gunston, 2006). The financial capacities of these units of the global market are lasting and durable. The liabilities of them are guaranteed by the state treasures; therefore it is natural to assume that the firm will not face customers-related difficulties (Elscher, Young, 1998).

The raw material necessitated for the industrial needs of the firm are 81% manufactured by the company itself. Most importantly, the metals needed for the output of the components produced by the firm is excavated by affiliate companies of the firm, Curtiss-Wright Metal Co. The production chain of the firm can be defined as almost “closed”.   The distribution channels are in no way endangered, and the firm is not expected to face suppliers-connected problems in the foreseeable future (Santos, 2010).

SWOT Analysis of the Firm

The main strengths of the company involves the large scale nature of the business, the significant accumulated financial resources of the firm, complex composite structure, permanent market demand on the commodities produced by the corporation and long-term cooperation with the national governments in general and the US one in particular.

With regard to the main weaknesses of the company, it shall be accentuated that the firm is highly dependent on the development of the military, aerospace and civil aircraft industries. The curtailment in these spheres inevitably leads to the decrease in the profitability of the company.  Another prospective feeble point of the corporation is the intensified technological dependence of the firm. To be more exact, the production facilities shall be permanently adjusted to the recent technological advancements (House, 2005).

The opportunities of the firm involve the focus on the civil communicational means production and industry oriented hard and software development.  Moreover, the company is reasonably expected to expand further to conquer the European and Asian markets.

The main threats of the company is the re-orientation of the United States military authorities to the competitors of the firm, the renunciation of the active military interventions, and the utilization of the alternative means of civic transportation.

Competitors Analysis and Value Chain of the Company

The main competitors of the firm are Moog, Hamilton Sundstrand, Woodward and Liebherr. The only competitor which exceeds the firm in terms of the revenues accrued and the staff employed is Hamilton Sundstrand.  However, the corporations do compete in two adjacent areas, the manufacture of the civil and military aircraft. ( Santos, 2010)  

The main advantage of the discussed company over the targeted competitors is the fact that the investment policy of Curtiss is technology-oriented.  Although Hamilton exceeds the corporation in terms of the accrued revenues, the profits generated by Curtiss are bigger, in the percentage paradigm.

Moreover, the recent financial crisis indicated that the layoff of the employees hired by Curtiss is lower than the ones of the competitors.  The following graph indicates the percentage of the dismissed staff during the recent 2007-2010 financial crisis( 2007-2010 annual financial statements).

Leading financial analysts recognize the number of the dismissed employees during the period of the financial difficulties as on the most illustrative indicators that demonstrate the financial stability of the firm (Porter, et. al, 2008). It is evident from this graph, that the firm is stable and effectively competes on the market.

Resource Based View and Value Chain Analysis

The value chain of the discussed company is considerably complex one.  On the most basic level it involves the group of primary and secondary activities.

The primary activities do involve the in-bound and outbound logistic activities, the productive-related operations, marketing and sales operations, service and subsequent maintenance.

The secondary, or so-called facilitative activities of the firm to deliver the product includes the construction of the proper infrastructure and the promotion of the effective human resource management.

Specific attention shall be laid to the fact that the corporation is composite in its nature and its separate division operates independently and inherently has its own value chain structure.

Accessing Strategy of the Corporation and the Role of Innovation

The innovative approach is the core element of the company success. As it has been outlined in the previous sections of the report, the main distinguishing feature of the company is the increased investment into the technological sector of the corporation (Santos, 2010). The new devices, software algorithms and technological tools are among the major resources of the firm * Gunston, 2006).

That chart demonstrates the estimated production of the aircraft in the upcoming years and the way the aircraft type production is affected by the technological revolution.

Conclusions and Recommendations

Having summarized the main points of the study, it can be inferentially concluded that nowadays the firm performs relatively successfully on all markets. The macro and microeconomic analysis of the company clearly suggest that the firm is both financially stable and competitive. Moreover, having analyzed the composite structure of the corporation clearly indicates that the firm is capable of withstanding crisis-related events of all natures.  The conducted SWOT analysis clearly manifests that while the opportunities of the firm are feasible and the strengths are real, the threats and weakness are both probable and hypothetical.

With regard to the recommendations to the company management, it shall be stressed that the company shall expand further to the European and Asian markets. Moreover, the company is highly advised to increase the investments made to the research and innovation areas of the company.  The core activities of the company are recommended to be re-oriented from the military to civil paradigm.

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