BAE SYSTEMS - an OVERVIEW 1

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 presented by
ALI ASHRAF
S1209016409
MBA/UWE/Villa College/2016
module: GLOBAL FINANCIAL STRATEGY
the industry: DEFENCE

BAE SYSTEMS - an OVERVIEW 3

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
the company: BAE SYSTEMS

- British manufacturer of aircraft missiles, avionics, aerospace and

defence products
- formed in 1999 - when British Aerospace PLC (BAe) and Marconi
Electronics Systems merged - both pioneers in aviation and
defence systems technology

TODAY
• BAE - provides some of the world’s most advanced, aerospace and
security solutions
• employs a skilled workforce of 83,400 people in over 40 countries.
• Working with customers and local partners, they develop, engineer,
manufacture and support products and systems to deliver military
capability, protect national security and people and keep critical
information and infrastructure secure.

BAE SYSTEMS - an OVERVIEW 4

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 VISION
to be the PREMIER
international defence,
aerospace and security
company
MISSION STRATEGY
to safeguard and maintain and grow in defence business
enhance customer’s vital continue to grow business in adjacent markets
interests and deliver develop and expand international business
sustainable growth in inspire and develop (BAE) people to drive success
shareholder value enhance overall financial performance and competitive positions

BAE SYSTEMS - an OVERVIEW 5

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 strategic OBJECTIVES

WIN
continue to win new
IMPROVE ACCELERATE international orders
continuously improve accelerate the growth
efficiency and of cyber, intelligence and
competitiveness security business

LEVERAGE
DRIVE
leverage on technology
continue to drive value
GROW and engineering
from defence platforms
continue to grow capabilities
and services
electronic systems
business

BAE SYSTEMS - an OVERVIEW 6

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 SWOT Analysis
STRENGTHS WEAKNESSES
• diversified portfolio • structural inertia -
• huge capital reserves hierarchical
• captures a major • less focus on private
portion of the market sector

S W
• good R&D base

OPPORTUNITIES THREATS
• emerging markets

O T
• buyers limited
• growing demand for • highly regulated
security industry
• the need for better • economic pressure
performance in • ethical pressure
warfare - using less
human action

BAE SYSTEMS - an OVERVIEW 7

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 PEST Analysis
POLITICAL SOCIO-CULTURAL
• high regulation
• soldiers deaths -
• government relationship
relates and demands
• government decides products
on safety
• buying decisions highly
• ethical on moral

P S
dependent on policy
issues on war & killing

ECONOMIC TECHNOLOGY
• since main buyer

E T
• advancements lead to
governments, innovation in internet,
economic recessions robotics and
affect buying unmanned warfare
• global economics
affect raw material
prices - aluminium,
steel and copper

BAE SYSTEMS - an OVERVIEW 8

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 FINANCIALS
SALES ORDER INTAKE UNDERLYING EBITA

EARNING PER OPERATING CASH NET DEBIT

SHARE (EPS) FLOW

BAE SYSTEMS - an OVERVIEW 9

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 BAE SYSTEMS - an OVERVIEW 10
presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 BAE SYSTEMS - an OVERVIEW 11
presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 UNDERSTANDING
• Both return on sales and net profit margins have declined relative to
previous year
• the company is financially unhealthy and is susceptible to external
economic conditions (credit)
• leverages highly on debt financing

BAE SYSTEMS - an OVERVIEW 12

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 CHALLENGES
• BAE highly dependent on government decisions
• in need of support in terms of government contracts
• economically volatile due to changes in economic policies - basically defence
spending
• growing resistance by public - sensitivity to war casualties
• in constant competition to develop new technologies and improve financial
efficiency
• Shareholders may not be happy with the drops in earning
• Consider - Five-Forces model - threat of new entrants - the BRIC countries
are developing their own manufacturing

BAE SYSTEMS - an OVERVIEW 13

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 YES,
YOUR
QUESTIONS
ARE
WELCOME!

BAE SYSTEMS - an OVERVIEW 14

presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy
 BAE SYSTEMS - an OVERVIEW 15
presented by: ALI ASHRAF (S1209016409) UWE MBA Jan 2016 at Villa College / Global Financial Strategy