Merrimack College Merrimack ScholarWorks

Honors Senior Capstone Projects Honors Program

Spring 2018

United Technologies Corporation: Pratt and Whitney Analysis

Emily LeClerc Merrimack College, [email protected]

Follow this and additional works at: https://scholarworks.merrimack.edu/honors_capstones

Part of the Business Analytics Commons, and the Business Intelligence Commons

Recommended Citation LeClerc, Emily, "United Technologies Corporation: Pratt and Whitney Analysis" (2018). Honors Senior Capstone Projects. 41. https://scholarworks.merrimack.edu/honors_capstones/41

This Capstone - Open Access is brought to you for free and open access by the Honors Program at Merrimack ScholarWorks. It has been accepted for inclusion in Honors Senior Capstone Projects by an authorized administrator of Merrimack ScholarWorks. For more information, please contact [email protected]. United Technologies Corporation: Pratt and Whitney Analysis Emily LeClerc 1 BUS4402: Strategic Analysis & Decision Making, Professor Robert Miller

Current Overall Strategy Mission Market Segment The Collaboration Strategy To be a world leader in design, Pratt and Whitney is the leading global supplier in the business jet, military, commercial This strategy distributes costs, risks, and sales across third party companies. This helps manufacture, and service of aircraft and general aviation market. negate some of the risks associated with the PESTEL categories outlined below. They primarily produce and develop “families of large engines for wide- and narrow- body engines and auxiliary power units for and large regional aircraft in the commercial market and for fighter, bomber, tanker, and transport aircraft in the military market” (UTC Annual Report, pg. 4). PESTEL ANALYSIS commercial and military aircrafts. Technological Five Forces Analysis Political Products 1. Retirement of Legacy Engines Commercial engines: PurePower PW1000G, V2500,GP7200, 1. State of the defense Social 2. Technological Improvements Entrants Rivals industry PW4000-94, PW-100, PW-112, PW2000, PW6000, JT8D, JT9D, 1. Aircraft demand 3. Development Timeframe 1. Honeywell Aerospace 2. Global/National Political Turbofan, Turboprop, and Turboshaft. 1. Cost impediment 2. Predicted Air 2. GE Aviation Climates Military Engines: F100, F117, F119, F135, and T900 Engines. 2. Technology is too Traffic Environmental advanced 3. Defense Spending 3. Fuel Price Auxiliary Power Units: airborne power units, “ground power units and, 1. PurePower Engines 3. Legal barriers Buyers 4. Foreign Policy 4. Airline Profits small expendable and recoverable turbojet propulsion systems” 2. U.S. Environmental Laws 4. Patents/IP 1. Government and Airlines 5. Active Military Flights 5. Labor Issues (Auxiliary Power Units, para. 2). 3. Clean Air and Water Acts 6. Deficit Reduction Efforts 6. Skills Gap 4. Noise Pollution 7. Gov’t Power Struggles 7. Consolidation Suppliers Substitutes 8. Bankruptcies Financial Analysis 1. Reverse Integrated 1. Actuation/Air/Thermal MGT 9. Safety Concerns Legal Compared to Honeywell Aerospace and GE Aviation, Pratt and Whitney into domestic and 2. Turbofan/prop/shaft Economic 10. Health Concerns 1. Gov’t/ Commercial Contracts has average levels of revenue, operating income, and assets. The stand international 3. True Choice 1. Economic Growth 11. Terror Attacks 2. Fixed-Price Contracts out data was the order backlog of 61,800,000 which indicates long term suppliers 4. Combat/Rotocraft Planes 2. Economic Depressions 12. Natural Disasters 3. International Laws financial stability and guaranteed revenue for the next fiscal year. This 2. Exclusive rights to 5. Tanker/Transport Vehicles 3. Vacation Rates 4. Environmental Laws stability can be seen in the increase in revenues of $1,266,000 in 2017. certain raw materials

VRIO Method Resources and Capabilities Application Implemented Strategies

Key Strengths: Business Corporate 1. Determine the resources and capabilities Cost Leadership through Innovation Leadership 2. Categorize as: 1. Backwards integration into suppliers 2. Efficient Shop Floor Layout Operational Efficiency Vertical assembly line increasing production People & Assets or Systems & Processes 3. International Locations Lower engine prices to capabilities which ties to patient innovation and then as: 4. Order Backlog acquire sales Patient Innovation

Tangible or Intangible. 5. PurePower C series contract Product Differentiation Accumulating assets and resources over time for PurePower engine utilization in innovation efforts 3. Assess according to the criteria of being 6. Aircraft Engine Certification and Designs 7. Patents and Intellectual Property provides a lower fuel, Vertical Integration/Outsourcing Valuable Rare 8. Collaboration on producing and supplying the lower noise option for Employee integration into suppliers to Inimitable Organized to exploit Government with certain engines airlines with high fuel troubleshoot production problems and ensure (VRIO). costs part quality Internal diversification Strategic Alliances 4. Place into the categories of: Key Weaknesses: (As of analysis 1) Related commercial and IAE, EA, etc. alliances between aerospace and Key Strengths Key Weaknesses. 1. Government Defense Contracts Amounts military product lines defense corporations

Weaknesses SWOT ANALYSIS . Strengths Opportunities Threats

1. Prior analyses: 1. Aircraft Engine Certification and Designs 1. Government contracts Gov’t Defense Contracts due to lower 1. Innovation by competitors 2. Backwards integration into suppliers The total amount generated for UTC from amounts awarded to Pratt & Whitney vs rivals. 2. Legal challenges across countries government contracts in 2016 was $6,909M, 3. Collaboration on producing and supplying 2. New data: Different safety, work, & production requirements. 1.47% of the defense budget for the year. the Government with certain engines Pratt and Whitney has shored up this 3. Economic downturns 2. Increased defense spending 4. Efficient Shop Floor Layout weakness. They are the current #6 company 4. Long development process The 2018 defense budget prefaces an Rivals innovation during this process may 5. International Locations awarded Gov’t Defense Contracts. anticipated increase in the allocation to UTC. 3. They trail behind: negate the need for new product or innovation. 6. Order Backlog (64.3 Million) 3. Order Backlog Lockheed Martin Corp., The Boeing Co., 5. Delivery scheduled multiple years out 7. Patents and Intellectual Property This indicates future revenues as the order has Raytheon Co., General Dynamics Corp., and Changes in the economy could result in 8. PurePower C series Contract been received. cancelled orders and a loss in revenue the Northrop Grumman Corp.

. Merrimack College Research and Creative Achievements Conference 2018