COMPETITIVE EXCELLENCE AT RAYTHEON

Raytheons Change towards Competitive Excellence

Jose Rodriguez
Western New England University
EMGT 619-40
January, 15, 2013

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Introduction
Raytheon Company is a frontrunner in the field of defense for United States. It produces guided
missiles and other weapons used by the defense department. Raytheon has beaten a host of other
companies that have competed with it for the coveted position it holds as one of Americas main
defense contractors, and to achieve this, it has employed a number of tactics to enable it achieve
competitive excellence. This report will identify some of the steps that Raytheon has taken
towards gaining competitive excellence. This report draws from several analyses carried out on
the company and the conclusions drawn from them. The steps that Raytheon has taken in order to
reach the heights it has reached today are not only outlined but also elaborated upon.

Raytheons Change towards Competitive Excellence

Raytheon is characterized as one of the largest military contractors in the world and
largest producer of guided-missiles in the U.S. Based in the U.S; it has been ranked the fourth
largest defense contractor, with revenues averaging $25 billion annually as the benchmark.
The major competitors of Raytheon are Lockheed Martin, General Dynamics and
Northrop Grumman. These companies are in cutthroat competition with Raytheon, and Raytheon
has had to come up with several strategies to beat off the competition effectively. They have all
participated in mergers and acquisitions in order to maintain their competitive advantage but in
doing so; have not only been able to boost their profiles, revenues or capital.
In order to remain competitive in the midst of such creative strategies, Raytheon also
sought to boost its growth in revenue and capital by mergers and acquisitions (Sheth, & Sisodia,

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2001). The company acquired Texas Instruments and E-Systems and performed a merger with
Hughes Aircraft Company. The acquisitions of Raytheon formed the Space and Airborne
Systems (SAS) business unit, and the company undertook great effort to ensure that Raytheon
and SAS worked as a unit. These acquisitions made Raytheon the huge company it needed to be
in order to ward off competition, however, the acquisitions left Raytheon in a multi-billion debt,
and the company made it a commitment and a fundamental aim to lay off the debt. Hence it
adopted the six-sigma business strategy in order to get out of the debt. The six sigma strategy not
only enabled Raytheon recover from the debt but also generated over $2 billion financial
benefits. The strategy involves using a project-driven approach in management to consistently
improve the products or services of a company (Kwak & Anbari, 2006). This is achieved by
incessantly reducing the defects of the company in its product or service delivery. It requires a
thorough understanding of the needs of the customer. Using this strategy, Raytheon was able to
reduce depot maintenance inspection time by about 85 percent, which was a major breakthrough
(Kwak & Anbari, 2006).
The competitive excellence strategy that has always been part of Raytheon since its
inception is the need to provide customers with the best quality of services. The company seeks
to give its customers world-class experience with the products that they produce. It produces
high-end products that meet international standards, and as such it has been able to maintain a
fair consistency in its clientele list. The companys motto, which is Customer Success is Our
Mission, captures this strategy of achieving competitive excellence succinctly. In fact, research
indicates that Raytheon is moving towards a best-value approach in its supply chains, and this is
working very well for the company (Ketchen, Rebarick, Hult, & Meyer, 2008).

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Raytheon has also sought alternative ways to sustain the success it has achieved through
the years. With the foreknowledge that the Obama administration would spend much less than
the Bush administration in defense, the company sought alternative ways of procuring money
(Kohlrus, 2009). Raytheon stands at an advantaged point in that while the costs for transportation
of ,military materials has been cut, what Raytheon focuses on radars, missiles and electronic
systems has remained fairly consistent in U.S spending. Thus, Raytheon has been able to
weather the Obama Storm.
Nonetheless, the company has maintained a positive advantage over its competitors as far
as investment is concerned, because of its superior gross and net profit margin, its better return
on equity and return on capital. Hence, Raytheon still remains the preferable company in which
to invest over its rivals.
Indeed, understanding that competitive success requires definite strategies, Raytheon has
taken the most decisive and creative steps towards achieving competitive success. The company
has been able to maintain its competitive edge from several worthy competitors by the steps it
took in acquisition, six sigma management strategy, sound economic forecasting and maintaining
a healthy profile in the stocks market. Hence, Raytheon has been able to achieve competitive
excellence.

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References
Ketchen, D. J., Rebarick, W., Hult, G. T. M., & Meyer, D. (2008). Best value supply chains: A
key competitive weapon for the 21st century. Business Horizons, 51(3), 235-243.
Kohlrus, T. (2009). Strategic analysis of Raytheon (Doctoral dissertation).
Kwak, Y. H., & Anbari, F. T. (2006). Benefits, obstacles, and future of six sigma
approach. Technovation, 26(5), 708-715.
Sheth, J. N., & Sisodia, R. (2001). The rule of three: surviving and thriving in competitive
markets. Simon and Schuster.