Textron, Inc Business Analysis

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Military Spending

Military spending cuts could adversely affect several sectors of Textron, including Textron Systems and Bell Helicopters, both of which have domestic and international military contracts. Approximately 24% of all revenues ($3.31 Billion) are from government contracts. $8.3B in profits from Textron Aviation and Bell Helicopter, or 61.9% of the profits. A major element of 2015 annual report was the roll out of a variety of new aircraft and helicopters. Also, Greater than 29% of all helicopters in operation today carry the Bell brand, including both military and commercial applications. Many of the

government contracts are long-term contracts. Bell Helicopter Textron Inc., Fort Worth, Texas, is being awarded a

$461,142,760 fixed-price incentive (firm target) modification to a previously awarded firm-fixed-price contract (N00019- 13-C-0023) to definitize the manufacture and delivery of 12 Lot 13 UH-1Y aircraft; 16 Lot 13 AH-1Z aircraft, and 16 auxiliary fuel kits. https://blog.clearedjobs.net/dod-contracts-bell-helicopter-textron-inc-awarded-461m-for-uh-1y- aircraft/

Conclusion

While Textron as a firm may not publically endorse a candidate, its employees may choose to endorse or financially support candidates. Depending on their role within the firm, these employees may need to pre-clear their activities or donations with the Textron Compliance Office to ensure that the action is appropriate. This should be communicated to employees. Additionally, both Trump and Clinton have been in the spotlight for potentially unethical behaviors (Clinton’s email scandal and the Trump University.) It will be important for Textron’s Ethics Office to reinforce the importance of ethical behavior, despite the revelation of the potentially unethical behaviors of the nation’s political figures.

A Republican nominee, like Donald Trump, with the help of a Republican congress, may be able to provide tax breaks for this large company in the long run. These tax breaks may be used to secure funding for other projects within the company or for the hiring of new employees which may expand the company. A Democratic nominee, like Bernie Sanders would look to raise the taxes paid by these large corporations. The more a company pays in taxes the less they are willing to dedicate to trainings, special projects or onboarding of new employees. However, Textron is a company dedicated to sustainable energy and they may be able to receive tax breaks by supporting environmental causes and sustainable energy, even with a president like Sanders at the helm. Ultimately, regardless of which candidate is elected, a Fortune 500 company like Textron is not going to be affected long term by the Presidential election because they are already such a large conglomerate that will have mergers and acquisitions regardless of who is in office.

2. How does Textron, Inc. need to adapt in order to see its continued growth in both the government and private sectors despite the challenges faced by the entrance of a new president?

Textron already holds the position as one of the best known multi-industry company’s in the world. With that said, as long as they maintain strong leadership at their executive level and an innovative workforce, they will continue to maintain their position as a Fortune 500 company. Executive leaders should remain optimistic, despite the hectic environment and vagueness that an election year may present. They should be transparent about information they know and any options they are considering that will have direct impact on employees or customers depending on them. The Executive Leadership Team should maintain consistency of message to its employees and reiterate that whatever happens during the political season, the company will continue on with business as usual and adapt to changes in manners that are beneficial to the company. Being transparent with the adjustments will foster trust and help to minimize negative emotions produced by changes. By making it easier for them to adapt to changes, Textron

may maintain employee confidence through potentially troubling times. One of the best things Textron has going for it is its diversified portfolio of businesses. Textron is a dominant player in three industries and is always looking at companies to acquire. By balancing its product segments and offerings, not relying too much on government contracts, and continuing to expand its portfolio, Textron will continue to thrive. Textron needs to stick to the fundamentals that made it great in order to stay great. Products. Processes. People. Make smart business decisions and focus on the basics.

Additional Information

Republican Nominee

Democratic Nominee

Mostly agree on the trans-pacific trade act

Mostly against trade act

Effect on Supply Chain

The agreement is going to reduce or elimination many of the tariffs incurred by Textron, and can potentially increase economic growth.

Textron will not benefit from the reduction/elimination of tariffs.

Higher logistics costs due to the change in sourcing patterns.

Textron may be subject to a conflict of interest with some of their affiliates such as Bell helicopter, due to the company's affiliation with military aviation. Due to the democratic affiliation with dept of defense there may be restrictions that would prevent Textron from doing business with some of their affiliates internationally.

Stronger trade agreements will shorten international shipment times, with the potential to radically reduce the length of the entire trade cycle.

Textron would have lower logistics cost because more products would be produced in the US.

If the TPP succeeds in fostering more U.S. exports, carriers could reduce costs by filling up their boxes on both trips across the Pacific.

Will need to continue sourcing many products from China. China manufacturing cost have been historically increasing YOY and will probably continue that trend.

the TPP could establish a freer flow of trade that would increase consumer demand for international products and ultimately create more business.

Textron