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The case compares two U.S. Department of Defense (DoD) programs from the 1970s and 1980s: (1) “stealth” combat aircraft, capable of evading detection or engagement by anti-aircraft systems, and (2) precision attack of hardened ground vehicles from “standoff” distances, i.e., far behind the battle lines. Conceived at roughly the same time, motivated by the same strategic challenge, and initially driven by the same DoD organization, stealth combat aircraft progressed from idea to deployment in less than eight years---an astounding pace for a complex military system---while a demonstrated system for standoff precision strike against mobile ground targets was not fully implemented. The case highlights the critical role of the Defense Advanced Research Projects Agency (DARPA), part of the DoD, regarded as one of the most innovative entities in the U.S. federal government.

The case highlights factors that facilitate rapid, successful implementation of radically innovative or disruptive concepts. Students are introduced to the organizational realities facing such projects, including issues of strategic clarity, interdepartmental competition and cooperation, executive leadership, and timing. Comparing the differences in implementation of the two programs in the case reveals issues relevant to any large organization seeking to bring innovative concepts to fruition.

In a typical strategy course, growth strategies like mergers and acquisitions (corporate strategy) are introduced in the second half of the course. To analyze the case, students will use strategies such as Porter’s five forces and resource-based view and will discuss why firms pursue mergers as a growth strategy, along with sources of synergies and risks in mergers. Finance theory used includes analyzing a given discounted cash flow analysis and perform a comparable multiples analysis to find the value of a merger target.

The industry and financial information in the case comes from publicly available sources, including company 10K reports, business press reports and publicly available industry reports. The information about Lockheed Martin’s strategy comes from interviews with Peter Clyne, former vice president for Lockheed Martin’s IS&GS division. He then held the same position for Leidos Holding Corp., after the IS&GS division was divested and incorporated into Leidos.

This case is an interdisciplinary case containing aspects of strategy and finance. Lockheed Martin made a strategic move in 2016, to divest its Information Systems & Global Strategies Division (IS&GS), which engaged in government consulting, primarily in the defense and aerospace industries. Lockheed wanted to reassess its decision to divest consulting, given the high growth rates expected in this business, particularly in cybersecurity consulting. On the other hand, if Lockheed decided to maintain its hardware focus, it wanted to expand its offerings. In addition to a strategy analysis, two possible target firms can be analyzed: Fortinet and Maxar.

This case raises a broad set of issues related to the evaluation of M&A transactions across two different industries and corporate strategy, as it relates to strategic fit of the potential targets and LM’s current capabilities. It is appropriate for the core course in strategy at the MBA or senior undergraduate level. It can also be assigned to specialized courses in Mergers and Acquisitions. It is not appropriate for a lower level strategy or finance course, as it requires students to have prior knowledge of basic finance valuation techniques.

Organizational restructuring strategy such as downsizing and rightsizing and their effects on organizational performance.

The case can be taught to graduate students of a business administration program for change management or human resources management courses.

The case discusses a structural change strategy followed by a crisis management situation of a Pakistani state-owned enterprise with hierarchical structures, unclear work roles and workplace corruption and its shift toward a profitable company with rebranded mission and values. With the management takeover by the Abraaj Group, several issues were identified as major blocks to K-ELECTRIC’s performance. Drastic changes included information technology advancement, investment in infrastructure of generation capacity, marketing campaigns and corporate social responsibility initiatives with a record profit in 2011-2012, for the first time in 17 years. But, the greatest challenge to quality service and profitability was faced by the human resources department, to retrench 4,459 workers by offering a voluntary separation scheme to non-core management staff in 2009. However, disregarding the successful impact on business performance, only 300 workers (approximately) had accepted the package in early 2010, while the rest questioned the decision of outsourcing non-core jobs and demanded reinstatement with the company, followed by a series of protests in January 2010. K-ELECTRIC needed to make some sensitive and timely decisions to ensure efficient and quality service to its customers as its top agenda.

The outcomes include: to understand the challenges faced by a recently privatized public utility service to become lean and efficient without compromising on its public mission of providing electricity to the residents of the city; to analyze the factors that influence choice of restructuring strategies and their effects on the employment relationship and organizational performance; to recognize the critical role of leadership in choosing a voluntary downsizing strategy and analyzing the sense of urgency needed to execute the decision; and to recognize the role of legal and organizational consultancy needed in critical decision-making to prevent workplace violence.

Teaching notes and teaching guide.