Case Study on "Strategic Management of Huntington Ingalls Industries, Inc"

Case Study 16 pages (4836 words) Sources: 16

[EXCERPT] . . . .

strategic management of Huntington Ingalls Industries, Inc., and analysis of the company strategic position reveals that the company provides the strategic product and services for the U.S. government. The report uses STEEPL analysis to determine the external factors affecting the company performance. The report has been able to reveal that the U.S. government is the only major customer of Huntington Ingalls and the state of the U.S. economy has affected the financial performance of the company. Based on the current recession facing the United States, the company suffered the financial loss at the end of the fiscal year 2011. The Porter 5 forces reveals that the company has high bargaining power as a sole supplier of shipbuilding as well as the only company to have competent to build war ship for the U.S. government. This strength will make the company to enjoy long-term relationship with the U.S. government. The report argues that Huntington Ingalls may suffer financial loss till 2015 because the U.S. government has decided to slash expenditure on defense. The report recommends that Huntington Ingalls needs to diversify its portfolio to improve its financial positions.

Introduction

Huntington Ingalls Industries, Inc. (HII) is an engineering company that specializes in the shipbuilding business. The company designs, builds and maintains both nuclear and non-nuclear ships for the U.S. Navy, and U.S. Coast Guard. The company also builds and designs aircraft carriers, submarine ships, and non-nuclear ships, which include expeditionary warfare, surface combatant, national security cutters and costal defense surface ships. More importantly, the company provides range of maintenance and support services such as fabrication, equipment, technical and equipment services. The company also offers product sales to the energy and petrochemical industry. (Huntington Ingalls Annual Report 2011).

Moreover, Huntington Ingalls provides additional services such as after market services for military ships globally. For more than 100 years, the company has built more ships than any other military shipbuilding companies in the United States has. Its primary business division is Ingalls Shipbuilding and Newport Shipbuilding. Huntington Ingalls is the sole company in the United States that designs, builds and refuels the nuclear power aircraft and expeditionary warfare ships for the U.S. Navy. The company primary area of business includes designing, repairing and constructing as well as proving maintenance for the nuclear-powered ship. The company also designs, and builds other type of ships such as surface combatants ship, amphibious assault and expeditionary warfare. The company also operates under other ship building subsidiaries such as Newport News, Louisiana, Avondale, Pascagoula Virginia,, and Mississippi. Major customer of Huntington Ingalls Industries is the U.S. government and the company conducts sustainable business with the U.S. Department of Defense (DoD). As a prime principal contractor to the U.S. government, the company participates in many high programs with the U.S. Department of Defense.

Huntington Ingalls employs more than 30,000 employees in Virginia, Louisiana, Mississippi and California. The company workforce consists of engineers, craftsmen and designers. In 2011, the company employed 975 Master ship builders, 5,100 engineers. Since the formation of the company, Huntington Ingalls has been able to record a success in its business operations and the company market capitalization is $1.89 Billion. Incorporated in 2010 in Delaware, the substantial company revenue comes from the U.S. government. In 2011, the company generated the 97% of its total revenues from the U.S. Navy and other 3% of the company revenue was realized from the U.S. Coast Guard. Typically, the company total assets increased from $5.2 billion in 2010 to $6 billion in 2011. Despite the increase in the company total assets, Huntington has not been able to increase the net income in the last 2 years. In 2010, the company recorded the net income of $135 million; however, at the end of the 2011 fiscal year, the company recorded a loss of $94 million. (Huntington Ingalls Annual Report 2011).

Mission and Vision

Hunington Ingalls motto is based on "Quality People Providing Quality Service." The company mission and vision are provided below.

Vision Statement

The Hunington Ingalls Industries "vision is to be a trusted, respected, and dynamic technical services provider sought out by customers, partners, and employees." (AMSEC, 2012 P. 1).

Mission Statement

The Hunington Ingalls Industries mission

"is to understand and provide Maintenance, Modernization, Logistics, Engineering, it, and Training solutions for the U.S. Navy and evolving government and maritime markets. Our expert team members take personal responsibility in providing quality services and solutions to maximize value for customers, partners, and employees." ( AMSEC, 2012 P. 2).

Huntington Ingalls Industries is to design, build, and maintain ships for the United States Navy and the U.S. Coastal Guard. The company expert team members takes personal responsibility in providing the quality services to maximizing the customer value, employee and partner. The company mission statement is also to "actively work to protect the health and safety of our employees, our environment and community while providing quality products and services in support of America's energy security and national defense-partnering with our workforce, customers and key alliances." (Newport News Industrial Corporation 2012 P1).

The company competitive strengths lie on its financial capabilities and its technical expertise, and the company total assets is $5.4 billion. The company competitive strengths also lies on its pool of its workforce who are able to design, and produce high quality ships for the U.S. Navy and U.S. Costal Guard. As part of the strategy to enhance competitive advantages, Huntington Ingalls Industries implements corporate social responsibility and protect the environment that the company is operating. The company protects the environment by following the environmental laws, and the company accrues costs to protect the environment. More importantly, the company focuses on the health and safety of stakeholders by ensuring that employee works in a safe and healthy environment.

Major stakeholders of Huntington Ingalls are employee, customers and the communities in which the company is operating. The company vision is to implement ethical principles with stakeholders. (Rebentisch, Crawley, Loureiro, et al. 2010).

The company also aspires is to ensure that employees works in a safety environment to minimize the occurrence of accident within the working environment. The company has also been providing value to customers by delivering high quality service and products. More importantly, the company tries to protect people from harm especially in the community, which it operates. By observing the environmental regulations, the company has been able to protect community from danger that might have occurred from its operations.

Strategic Elements of History

The company strategy element is to leverage performance improvement to create value to customers. Inherently, the company strategy is to meet exceeding performances in the company four pillar of success, which include quality, costs, schedule and safety. Huntington Ingalls focuses on strengthening and protecting the new market position as well as capturing new business. The company also implements a strong program execution coupled with selected capital investment to support new and current investment. Part of the strategy of Huntington Ingalls is to capture new business to strengthening market positions. The new businesses that company intends to capture are Aircraft carrier inactivation, Energy market adjacencies, VCS 2 per year, and Ohio-class replacement program. At Newport News, the company also maintains financial predictability as well as backlog and stability. At December 31, 2011, the company total backlog was $16.3 billion, which was higher than $17.3 billion realized from the backlog at the end of 2010. More importantly, the company focuses on the efficient serial production, which includes procurement efficiency, and quality improvement. The most significant material used for the shipbuilding is steel. Other materials that the company uses in large quantity are aluminum, paint and pipe. However, these materials are available in adequate supply, and the company procures these materials at competitive price to decline the cost of operations. The company procures the component parts from different suppliers and the company mitigates the risks by negotiating long-term agreement with number of suppliers. While shipbuilding is the primary business of the Huntington Ingalls, however, the company focuses on highly diverse portfolio capable to explore market opportunities. The company also uses management competence and talented workforce to explore and enter into the partnership in the offshore wind energy business, and commercial nuclear energy. Typically, the company uses its superior competence and technology to achieve strategic advantage. For example, Huntington Ingalls is the only company that builds amphibious transport docks, nuclear-powered aircraft carriers, and large-deck amphibious assault ships. The construction of these sophisticated ships requires knowledgeable and highly skilled workforce. Thus, the company has been able to use its leadership team, state-of-the-art facilities and prudent capital investments to align customers' priorities.

Investment in workforce is another strategy that the company employs to achieve market efficiency. Huntington Ingalls uses the efficient management to achieve strategy competitive advantages. To enhance growth for the organization, management focuses on better competitive position for future business since the company realizes that continued performance improvement is the strategy that the company will use to achieve significant margin expansion. Huntington Ingalls also focuses on research and development (R&D) to produce… READ MORE

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