Businessmodel of Northrop Grumman

Customer Segments

Northrop Grumman provides a broad range of services and solutions that are targeted at various commercial and institutional clients. The Company primarily serves customers across the following sectors:

• Military and Defense, comprising various US and international military and defense bodies, spanning all arms of the military, including the air force, navy, and army;
• Commercial and Civil Aviation, comprising commercial airline operators, airport operators, civil aviation bodies, and aviation engineering companies;
• Medical and Healthcare, comprising public health bodies, and commercial healthcare operators
• Commercial Enterprises, comprising various commercial and corporate enterprises across multiple business sectors, including financial services and oil and gas; and
• Government, comprising various local, state, and federal government bodies across the US, as well as certain international government entities. Northrop Grumman’s largest customer by far is the US Government which in 2015, 2014, and 2013 respectively accounted for 83%, 84%, and 86% of the Company’s annual sales.

Northrop Grumman principally serves customers across the US, which accounts for vast majority of its business. The Company also serves an international customer base, with including customers in 25 countries across North America, Europe, the Middle East, and Asia Pacific.

Value Propositions

Northrop Grumman provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as a leading company in its field, having garnered a reputation as a reliable and efficient provider of effective solutions, and attracted a significant amount of business from the US Government;
• Its broad range of solutions and services, with the Company providing a broad range of services and solutions across multiple government and commercial sectors, including military and defense, aviation and aerospace, healthcare, and public office;
• Its international reach, with the Company providing services to customers in 25 countries across North America, Asia Pacific, Europe, and the Middle East, in addition to its extensive domestic business;
• Its technical expertise and experience, with the Company employing highly-qualified technical personnel across multiple disciplines, as well as a team of experienced industry executives; and
• Its proprietary technologies and innovation, with the Company committed to developing innovative and unique solutions to ensure its customers receive cutting edge services. ### Channels

Northrop Grumman operates a website at www.northropgrumman.com, through which it provides information on its various services, solutions, target industries, and locations. The Company does not operate an online sales channel, nor does it provide an online customer portal.

Northrop Grumman makes its sales through an in-house sales force, which is divided by operating segment and by geographic region. The Company’s sales personnel operate out of the Company’s corporate offices in Abu Dhabi, Canberra, London, Riyadh, Seoul and Tokyo, where the Company’s country chief executives are based, as well as the Company’s network of regional offices in Europe and in Singapore, Taipei and New Delhi.

Customer Relationships

Northrop Grumman does not offer products and solutions to its customers on a self-service basis. The Company, instead, makes sales through a dedicated sales force that consults directly with customers in order to ensure that a detailed and accurate brief is established. The Company provides tailored services to each individual client, with larger customers having their own dedicated account management teams available to them at all times.

Northrop Grumman provides ongoing customer support services to its clients, maintaining their solutions and systems, providing advice and guidance, as well as any relevant updates to software. The Company provides a range of online resources for its customer, including FAQs, briefings and analysis papers, and innovation guides. Customers can also access personalised responses to queries and concerns by contacting the relevant department or office by phone or email, with the Company providing an extensive catalogue of contact details through sits website.

Additionally, Northrop Grumman operates several social media accounts – including with Facebook, Twitter, LinkedIn, YouTube, and Flickr – through which it is also able to interact directly with customers.

Key Activities

Northrop Grumman is a global security services provider. The Company provides a broad range of technical and information solutions, products and services to a broad customer base, which includes government agencies, military and defense bodies, aviation and aerospace organisations, and medical and healthcare bodies in 25 countries across North America, Asia Pacific, Europe, and the Middle East.

Northrop Grumman organises its operations in to four reportable business segments: Aerospace Systems, comprising the provision of various aerospace solutions, including manned aircraft, unmanned systems, spacecraft, and microelectronics; Electronic Systems, comprising the provision of various electronic systems, including defense electronics, airborne fire control radars, situational awareness systems, and early warning systems; Information Systems, comprising the provision of various information systems, including communications, command control, air and missile defense, and intelligence processing systems; and Technical Services, comprising the provision of various technical services, including missile defense, nuclear security, training and simulation services.

Key Partners

Northrop Grumman works closely with a broad range of companies and organisations throughout the development and implementation of its solutions and services. These partners include:

• Supplier and Vendor Partners, comprising suppliers of raw materials, tools, equipment, services, and technologies that are utilised across the Company’s operating segments in support of its various services, as well as companies to which non-technical functions can be outsourced;
• Joint Venture Partners, comprising various other defense, information, and technical contractors, with the Company collaborate son various projects and services through mutually owned entities;
• Development and Innovation Partners, comprising various small business that develop and market innovative technology solutions, with which the Company collaborates in developing, integrating, and implementing their solutions; and
• Academic and Education Partnerships, comprising various universities and colleges around the world, with which the Company collaborates on developing cyber curriculum and degree programs. Northrop Grumman has launched a number of partnerships in recent years. This includes a partnership with Carnegie Mellon University’s cybersecurity institute, CyLab, to develop mobile security solutions; a strategic partnership with Australia’s DST Group to work on various projects; and a tie-up with Antelope Valley College, the City of Palmdale, and the South Valley WorkSource Centre to train aerospace workers.

Key Resources

Northrop Grumman’s key resources are its technologies and intellectual properties, its proprietary solutions, its IT and communications infrastructure, its research and development facilities, its manufacturing facilities, its sales and distribution channels, its partnerships, and its personnel.

Northrop Grumman utilises patent and trade secret laws to protect intellectual properties used in its solutions and products. It also licenses technologies and intellectual properties from third parties. Searches of records published by the US Patent and Trademark Office identified numerous patent applications filed in Northrop Grumman’s name, including applications entitled ‘Waveguide and semiconductor packaging’, ‘Array processing for satellite communications’ and ‘Wideband tunable notch cancellation’.

Northrop Grumman owns and or leases numerous properties across the US and internationally that are key to its operations, including a network of research and testing facilities, manufacturing facilities, warehouses, and administrative and corporate offices.

Cost Structure

Northrop Grumman incurs costs in relation to the development and testing of its solutions, the maintenance of its IT and communications infrastructure, the operation of its manufacturing facilities and procurement of materials, the operation of its sales and distribution channels, the management of its partnerships, and the retention of its personnel.

In 2015 Northrop Grumman accrued total operating costs and expenses in the amount of $20.45 billion, including labour, material, subcontractor and overhead costs. The Company’s research company-sponsored research and development expenses totaled $712 million for the year.

Revenue Streams

Northrop Grumman generates revenue through the provision of various information, electronic, technical, and aerospace solutions. This includes the manufacture and sale of physical products, the provision of specialist and professional services, and the provision of various technology-based solutions.

In 2015 Northrop Grumman generated $23.53 billion in total sales for the year, up on the $20.61 recorded by the Company in 2014. The Company’s Aerospace Systems segment is its largest revenue generator, alone accounting in 2015 for $10.00 billion, of which the majority was attributed to product sales.