Businessmodel of Raytheon

Customer Segments

Raytheon has a niche market business model, with a specialized customer segment. The company targets its offerings at government customers, primarily agencies in the defense industry. That said, it does provide products and services to some commercial clients.

Value Proposition

Raytheon offers three primary value propositions: innovation, accessibility, and brand/status.

The company has embraced innovation from the very beginning. Examples of its cutting-edge products are as follows:

• Developed the S-tube, which enabled the conversion of alternating current to direct current
• Invented the magnetron, which improved the ability of radar to detect aircraft
• Invented the microwave oven, which derived from the ability of the magnetron to heat food

• Developed the first guidance system for a missile that could intercept a flying target The company creates accessibility by providing a wide variety of options. It has acquired numerous other firms since its founding, which has enabled it to greatly expand its portfolio. These include:

• Beech Aircraft Corporation, a producer of general aviation aircraft
• E-Systems, a provider of intelligence, surveillance and reconnaissance (ISR) and cybersecurity solutions
• Chrysler Corporation’s aircraft-modification and defense electronics businesses
• Hughes Aircraft Company’s aerospace and defense business The company has established a powerful brand due to its success. As of 2015, it is the world’s fourth largest military contractor and third largest defense contractor by revenues. It distributes its products to over 80 countries and maintains offices in 19 nations with over 61,000 employees. Lastly, it has many prominent customers, including (in the U.S.) the Air Force, the Army, the Navy, the Marine Corps, the Department of Homeland Security (DHS), the Federal Aviation Administration (FAA), the National Aeronautics and Space Administration (NASA), and the National Oceanic and Atmospheric Administration (NOAA). It also serves the armed forces of over 40 allied nations.

Channels

Raytheon’s main channels are its business development and sales teams. The company promotes its offering through its social media pages and participation in trade shows and conferences.

Customer Relationships

Raytheon’s customer relationship is primarily of a personal assistance nature. The company works closely with its clients to ensure that they understand its solutions and use them effectively. Specifically, it assists them in the following ways:

• Training Services – The company offers instructor-led classroom training, virtual classroom training (VCT), simulation-based training, and mobile learning.
• Consulting Services – The company offers business improvement consulting services in the areas of Leadership Development, Analytics, and Performance Improvement Processes. Despite this orientation, there is also a self-service component. Raytheon provides self-paced training in a web-based format, allowing customers to learn on their own schedules. It also maintains a video library featuring everything from practical instructional programs to theoretical product demonstrations. The company’s website offers a set of customer tools that require special access on its website; these include eMeeting Sametime Servers, Weapon Information System Data Management, and the Patriot Information Management System. Lastly, the site provides self-help resources such as white papers, webinars, and an online magazine called Technology Today.

Key Activities

Raytheon’s business model entails designing, developing, and manufacturing its products and offering related services for customers.

Key Partners

Raytheon’s key partners are the network of suppliers and subcontractors from whom it obtains raw materials and major components in the manufacture of its products. Its website provides suppliers with helpful resources such as supplier guides (on topics such as doing business with Raytheon and supplier readiness), communication tools, and access to the Exostar Supplier Portal.

Key Resources

Raytheon’s main resources are its human resources, who include the engineers and scientists that design, develop, and manufacture its products, the training staff members that provide instruction, and the consulting staff members that provide advisory services. It also maintains important physical resources in the form of Raytheon BBN Technologies, a set of research and development centers.

Cost Structure

Raytheon has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent product enhancements.

Its biggest cost driver is cost of products, a variable expense. Other major drivers are cost of services, a variable expense, as well as sales/marketing, research and development, and administration, all fixed costs.

Revenue Streams

Raytheon has one revenue stream: revenues it generates from the contracts it forms with its clients for the sale of its products and services. Its service revenue primarily comes from its IIS segment.