How Defense Contractors Can Survive in a Smaller Market

Abstract

ABSTRACT Many of the articles and discussions of defense conversion revolve around larger major system procurement companies. The objective of this study is to review the mind-set and actions taken by the smaller, perhaps more labor intensive research and services firms. Further objectives were to determine if smaller firms have felt the effects of government downsizing, if they have diversified away from government work, what their strategies for diversification are, if any, and can their strategies be transplanted or useful to other companies in the same situation. Smaller firms usually benefit from lack of a rigid bureaucracy and a more versatile management structure. In order to gather the pertinent information, a questionnaire was developed to interview executives of these smaller service-oriented firms. The interviews sought to determine how they capitalized on previous government contract work, any patent rights to products they initially designed for government use, and any other way these firms were able to use previous government work to their benefit. Additionally, a number of documented case studies on companies that have been described as successfully being able to diversify were researched. From the questionnaire and case studies, conclusions and a set of observations were established that may serve as a set of guidelines to successful diversification.