NEW CLIENTELE:
LHM could use NSI’s base of global presence for building further clientele in its existing business by introducing LHM’s products and technologies to NSI’s customers.
DIVERSIFICATION OF BUSINESS:
NSI allows LHM to diversify its business while maintaining a strategic relevance with the defense related industry. This is done by adding NSI’s support services business in LHM’s defense goods-related business (with manufacturing and technical aspects).
DIVERSIFICATION OF MARKET:
A prime attraction of NSI is its large global market presence, which also allows LHM to diversify its market by adding new market segments that are currently present with its majority based in the US.
Synergies effect:
LHM’s size and financial strength could allow NSI to go for high-end contracts by bidding on larger projects. Currently, NSI place bids on contracts that are not too large. However, with LHM’s support, NSI would achieve a strong size to bid almost on any size of proposal. Simultaneously, LHM could support NSI in its marketing segment by offering its expertise in this area and hence could enable it to expand its business allowing synergic effects.
As this combination would allow NSI to boost its business, the potential for growth is huge as the available market is a lucrative one as disaster relief is an un-tapped multi-billion dollar market. This combination would improve various capabilities of NSI as supply-chain management, project management, marketing, bidding, logistics, etc. NSI have an expertise in rapid mobility specifically in remote environments which could also allow help LHM to improve its supply chain. Similarly, synergies are expected from global presence of NSI, which would allow LHM to boost its clientele worldwide that would be quite costly, difficult and time-consuming in case of sole LHM’s operations.
How the strategic goal of such an acquisition would be characterized: consolidation, market expansion, adding volume/scale, or as an R&D play?
LHM’s strategy is focused on acquiring strong companies, with strategic importance and having small size, which are compared with “pearls” by LHM’s CEO. Maximizing shareholder’s value requires LHM to add attractive firms of small size who offer long-term strategic combination to the group.
The intention or core reason behind this deal is the strong global presence of NSI that would allow LHM to enjoy international expansion in its market. This prime attraction of the deal links various synergic and strategic benefit with it that are discussed above (as diversification of business, diversification of market, new clientele etc).
This global presence of NSI is thus considered to be the tool for market expansion and hence the core strategic goal behind this deal.
If NSI is acquired, how should it be integrated into Lockheed Martin? Should NSI continue as a standalone company with little to no integration into Lockheed Martin’s operations? Or should it be fully integrated into Lockheed Martin:
The organizational structure of NSI is of an informal, de-centralized organization which is open and flexible to any change required for operation in the global atmosphere, specifically in case of remote environments.
On the other hand, LHM have an entirely opposite structure with a more formal look, complex structure, strict policy and procedural controls that do not offer flexibility.
The nature of NSI’s business and operations itself requires a flexible structure, allowing it to mold itself as per global, political and cultural needs. Simultaneously, there is a track record of financial growth, stability and success achieved by the firm using this model. Therefore, it is suggested that NSI should be added with LHM with a little management changes, if LHM deems it fit then, no further integration or changes are required.
This would require NSI to continue as a standalone company due to its nature of work that requires this flexibility well supported by NSI’s successful growth since last 50 years with profitability almost up to the mark of the industry leader......................................
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