The College at brockport| Stakeholder Analysis| Lockheed Martin| Matthew Vogt| | 4/27/2010| The analysis of Lockheed Martin and it’s affect on stakeholders. Corporations have impacts on a variety of people ranging from shareholders, to governments, to ordinary citizens. This paper analyzes the impact Lockheed Martin has on all stakeholders, both positive and negative. | Matthew Vogt Business, Government and Society 26 April 2010 Lockheed Martin: Stakeholder Analysis What is a stakeholder? A stakeholder is someone who someone who benefits or is burdened by a corporation, or someone who the corporation benefits or is burdened by. Steiner). Stakeholders are represented by two main groups; primary and secondary stakeholders. Primary stakeholders are those who have either have a direct interest in a firm; such as a stockholder, a creditor, or an employee, or someone who the firm has a direct interest in such as a supplier, the governments, or a partner. Secondary stakeholders include those who are affected by a firm, yet from a more distant connection. Often secondary stakeholders cannot attribute their benefit or detriment directly to the firm, however the connection does exist and there is a relationship however indirect it is.
Primary stakeholders have closer connections with the firm whereas secondary stakeholders’ exhibit more stretched connections. Although primary and secondary stakeholders differ in the proximity or relations to a firm, both have a similar interest in the firm, as it either directly or indirectly influences each group’s way of life. The main stakeholders: There are six main groups of stakeholders that represent the majority of groups influenced by a firm’s actions. Included in this group are: Stockholders, Governments, Customers, Employees, the General Public, and Special Interest Groups.
Each of these factions has an interest in the businesses actions, as they are affected by them. Stockholders: Stockholders have a very direct relationship with the corporation. By investing in a firm, individuals become partial owners of the business and by doing so they become financially rewarded or punished by a firm’s performance. Being a stockholder can have great rewards like a viable source of income, or an eggs nest for retirement, however it does have its downsides as well. Owning stock in a corporation bears the risk of losing all one’s investment if the company goes bankrupt.
Aside from financial benefits, owning stock allows stockholders to have a voice (however small it may be) in the company’s direction. Lockheed Martin stock has been appreciating in value since the beginning of the company in 1995 when both Lockheed and Martin Marietta merged. On March 16th, 1995 the stock price of Lockheed Martin stock was a mere $25. 13. On April 1st 2010, the stock was valued at $83. 61, a difference of more than 3. 3 times. (Lockheed Martin, Historical Price Lookup). Lockheed Martin has issued dividends to stockholders consistently, however they are relatively small in value.
The issuing of dividends varies from company to company, as some firms issue regular and predictable amounts while others issue none, or sporadic dividends to shareholders. Along with the financial rewards of holding Lockheed Martin stock, stockholders are able to voice their opinions and help guide the company in a direction favorable to their beliefs. For instance, a stockholder could use their voice to steer a company towards a more green and sustainable development, or a stockholder could help to push a company towards greatest profitability depending on the individual’s interests and the aggregate interest of the stockholders.
In theory, the concept of having a say in a company that one owns is a wonderful idea; however it differs greatly in practice. Lockheed Martin has 1,500,000,000 shares of common stock issued at $1 each par value. Each issue of stock has one vote on corporate matters. Even at par value, it would cost 750 million dollars to own a 50% share in the stock. With the current market value being at over $80 per share, owning a portion that would allow one to have a significant say in the company would cost an astronomical amount of money and is really out of touch for pretty much everyone. Lockheed Martin Corporate Charter). Although stockholders are usually extremely beneficial to a corporation by supplying much needed funds to finance business operation (especially expensive mergers and acquisitions), stockholders can also be a burden on the corporation. With the power to vote on corporate decisions, stockholders are able to essentially steer the board of directors, and ultimately the direction of the corporation. However small and insignificant an individual stockholder’s vote is, the conglomeration of millions of individual votes does make an impact on the corporation.
If the overall vote of the stockholders does not coincide with the intended direction of the corporation, then stockholders become a nuisance to the business. Government: The government is a primary stakeholder to Lockheed Martin. The has an interesting relationship with Lockheed Martin, as they are both a regulating body (like government with any industry or individual firm), however Lockheed Martin also supplies the government with much needed defense equipment. As Lockheed Martin and the government share a relationship of trade, the government has a business relationship as well with the firm.
For the purpose of this section, government will be viewed as a traditional relationship with a firm and the customer portion of the relationship will be ignored until the stakeholder analysis of customers is explored. Usually, the presence of government is an aggravation to business, as government imposes taxes, regulation, and measures to protect trade and public policy that usually tend to be unfavorable towards business. By issuing taxes, government decreases the amount of money a firm generates, and thus limits the profits of the company.
With regulation, government makes doing business more frustrating, with more regulatory hoops for a company to jump through. Agencies like OSHA make workers safety a priority, and although OSHA is good for public prosperity and wellbeing, it makes doing business more costly and less efficient for companies like Lockheed Martin. There are many regulatory commissions that limit possibilities and increase costs within corporations, and more often than not these agencies have a negative impact on business. Lockheed Martin has had numerous fines and monetary damages resulting from the violation of federal regulations.
Their infractions have varied from employee rights (age discrimination) to business regulation (unfair business practices, contractor kickbacks) to unregulated trade (unlicensed exports to Korea) to environmental regulation (violating EPA regulations for groundwater cleanups). (http://www. contractormisconduct. org/index. cfm/1,73,221,html? ContractorID=38&ranking=1). Aside from all the negatives of government, Lockheed Martin benefits from the presence of government in some certain ways. Governments have tremendous financial assets at their disposal, and at times are able to use these resources to spur development and innovation.
By offering incentives (usually tax related), the government is able to aid companies (like Lockheed Martin) to improve processes, build upon current technology, increase efficiency, and innovate. Companies can also benefit from the presence of government as government protects free trade, open markets, and the legal system on which business prospers. Without government, the free market would not exist, making business extremely hard to conduct. As much as government burdens business, business could not survive without government moderating commerce. Customers: Customers are yet another example of primary stakeholders.
By purchasing products and services a firm offers, customers expose themselves to gaining benefits or suffering from the transaction. For Lockheed Martin, customers include the U. S. government – department of defense (80% of product demand), other governments, and some commercial sales. (http://www. sourcewatch. org/index. php? title=Lockheed_Martin ). As Lockheed martin sells mainly advanced technology, the majority of people in need of such products and services tend to be governments militaries. The cost of this technologically advanced defense equipment is extremely high, so really