<p align="justify">General Dynamics (GD) is an American aerospace and defense contractor based in Reston, Virginia. General Dynamics was incorporated in 1899.GD has divided its work into five groups Aerospace, Combat Systems, Information Technology, Mission Systems, and Marine Systems. The company produces a different range of products through its subsidiaries (General Dynamics, 2020). The majority of its subsidiaries are located in North America. It is well known for its aviation success both in civil and military planes as well as the combat systems. Its combat system is the major defense equipment it sells all over the world. It also holds key defense contracts all over the world. ; Porter’s five forces model is a useful tool to identify threats and opportunities faced by General Dynamics in the defense industry.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
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The defense industry is growing at a steady pace in the last 2 decades. The recent security threats are the reason for its growth in the last couple of years (Deloitte). The main rival of General Dynamics is Lockheed Martin and Northrop Grumman. The major rivals are both based in The United States. The annual revenue of General Dynamics in 2019 was $36,193M. (Fortune). Its major competitors Lockheed Martin and Northrop Grumman generated annual revenue of $53,762M and $30,095M respectively (Fortune). The air and defense industry is a major part of the American economy. It generated around 1.6% of America’s total GDP. This competition has been increased recently to the establishment of industry in Asia and Europe. The US imports majority of its defense products in those regions.</p>
<h2 align="justify">Threat of Substitutes</h2>
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The aerospace and defense industry is growing at a steady pace. It is due to the security threat around the world. The industry is very competitive and technologically advanced. The technological revolution played a major role in its advancement recently. The overall threat of substitution is low because of the higher demand for defense technology from all over the world. The civil aviation industry is also growing rapidly as of 2019 (Deloitte). The industry requires a new quality product with a technologically advanced system to compete with the products available in the market. GD has already a major defense contractor in the United States. General Dynamics had spent billions of dollars to keep up with the need of the 21st century. The threat level is low as long as they move with the requirement of the time.
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<h2 align="justify">Threat of new Entrants</h2>
<p align="justify">The aerospace and defense industry is very restricted in the world. The industry is highly competitive and concentrated. The higher capital investment, technological advancement, and product quality makes it impossible for new entrants. The new entrant must come with a better product and relatively cheap to compete with the already established companies. The difficult part is getting the government&#8217;s contract for long term financial security. The bigger companies spend billions of dollars on their Research &; Innovation departments to stay ahead of their rival. Which makes it difficult for startups to keep up with those companies. The new entrant is restricted due to the higher value of the initial capital required to establish a company.
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<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">The major buyers of defense equipment are countries around the world. The countries in the emerging market hold lesser power as compared to developed countries like the United States. The major buyers can enforce its bargaining power by acquiring better quality and reduction in price. They provide long-term defense contracts. The main buyer such as the US, the department of defense can also act as the regulator for them. It controls the overall product quality and can use its power for better deals. The regulator can set limits on defense deals with countries too. Which makes it a powerful negotiator in a deal. For now, a consumer from the United States has higher bargaining power than the one in the emerging market.
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<h2 align="justify">Bargaining power of Suppliers</h2>
<p align="justify">The supplier in this industry holds power because of the cost of integration with the company. The industry wants to keep working with its suppliers because of integration and the quality of the product. The defense contracts usually take decades to complete. The company doesn&#8217;t want to compromise on its product. So usually they keep the same supplier for the whole project. The cost of integration and length of a contract is a real bargaining chip for the supplier. The few of the aerospace and defense industry uses its in-house facilities to make its products and vertically integrated. Then overall bargaining power is higher in favor of the supplier. </p>
<h2 align="justify">References</h2>
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Fortune. (2019) Global 500. Available at: https://fortune.com/fortune500/2019/general-dynamics/<br />
Fortune. (2019) Global 500. Available at: https://fortune.com/fortune500/2019/northrop-grumman/<br />
Fortune. (2019) Global 500. Available at: https://fortune.com/fortune500/2019/lockheed-martin/<br />
Deloitte. (2019) 2018 global aerospace and defense industry outlook. Available at https://www2.deloitte.com/content/dam/Deloitte/us/Documents/manufacturing/us-mfg-2019-global-a-and-d-sector-outlook.pdf<br />
General Dynamics. (2020) About General Dynamics. Available at: https://www.gd.com/about-gd</p>