<div class="post">
<div class="body">
<div id="c2888e0d-3b74-4d25-83b4-41787a850096" class="postBody" contenteditable="true">
<p align="justify">Raytheon Technologies is an American aerospace and defense contractor based in Waltham, Massachusetts. It is one of the largest aerospace, intelligence services providers, and defense manufacturers in the world by revenue and market capitalization. Raytheon Technologies was formed by the merger of United Technologies Corporation and Raytheon Company in 2020. Th Raytheon Technologies is an American aerospace and defense contractor based in Waltham e company produces a different range of products through its subsidiaries (Raytheon, 2021). Its main 4 four subsidiaries are Collins Aerospace, Pratt &; Whitney, Raytheon Intelligence &; Space, and Raytheon Missiles and Defense. The majority of its subsidiaries are located in North America. It is well known for its aviation success both in civil and military planes and combat systems. Its combat system is the major defense equipment it sells all over the world. It also holds key defense contracts in the United States. Porter’s five forces model is a useful tool to identify threats and opportunities faced by Raytheon Technologies in the defense industry.</p>
<h2>Competitive Rivalry in the Market</h2>
<p align="justify">The defense industry is growing at a steady pace in the last two decades. The recent security threats are the reason for its growth in a previous couple of years. The main rival of Raytheon Technologies is The United States-based Lockheed Martin and Northrop Grumman. The annual revenue of Raytheon Technologies in 2020 was $56,587M. (Fortune, 2021). Its major competitors Lockheed Martin and Northrop Grumman, generated a yearly income of $65,398M and $36,799M, respectively (Fortune, 2021). 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>Threat of Substitutes</h2>
<p align="justify">The growth in the aerospace and defense industry is unprecedented—the reason for that growth 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 worldwide. The industry is moving well at a time to innovate better products for the 21st century. The civil aviation industry is also growing rapidly as of 2019 (Lineberger, 2019). The industry requires a new quality product with a technologically advanced system to compete with the products available in the market. Raytheon is already a major defense contractor in the United States. Raytheon had spent billions of dollars on keeping up with the need of the 21st century. The threat level is low as long as they move with the requirement of the time.</p>
<h2>The Threat of New Entrants</h2>
<p align="justify">The threat of new entrance is very low &; there are many factors for it. It requires higher capital investment to set up the company. The contracts are usually long-term, so it means the money will slowly come from sales. Besides capital investment, technological advancement &; product quality makes it impossible for the new entrants. The latest entrant must come with a better product and relatively cheap to compete with established companies. The Government funds the industry leaders for their Research and development programs (Serbu, 2020). The market is concentrated and highly competitive. The difficult part is getting the Government&#8217;s contract for long-term financial security, making it difficult for startups to keep up with those companies.</p>
<h2>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 emerging market countries are offering new contracts but due to limited funds. Those countries can&#8217;t exert power due to limited purchasing capacity. The major buyers can enforce their bargaining power by acquiring better quality and reducing price (Martin, 2019). 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, making it a powerful negotiator in an agreement. Overall bargaining power depends on the buyer, but it is moderate to high.</p>
<h2>Bargaining Power of Suppliers</h2>
<p align="justify">The suppliers in this industry hold power because of the cost of integration with the company. Also, if few suppliers dominate the industry and if the industry is more concentrated than the industry it sells (Porter, 1979). 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 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>
<p align="left">Fortune. (2021) Lockheed Martin. Available at: https://fortune.com/company/lockheed-martin/fortune500/<br />
Fortune. (2021) Northrop Grumman. Available at: https://fortune.com/company/northrop-grumman/fortune500/<br />
Fortune. (2021) Raytheon Technologies. Available at: https://fortune.com/company/united-technologies/fortune500/<br />
Lineberger., R (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 />
Martin., M (2019) How Porter&#8217;s Five Forces Can Help Small Businesses Analyze the Competition. Available at: https://www.businessnewsdaily.com/5446-porters-five-forces.html<br />
Porter., E. M (1979) How Competitive Forces Shape Strategy. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy<br />
Raytheon. (2021) Our Businesses. Available at: https://www.rtx.com/our-company/our-businesses/ca<br />
Serbu., J (2020) Pentagon R&;D spending still lags behind an otherwise healthy Defense budget. Available at: https://federalnewsnetwork.com/defense-main/2020/10/pentagon-rd-spending-still-lags-behind-an-otherwise-healthy-defense-budget/</p>
</div>
</div>
</div>