(Updated: June 24, 2024)
Small and mid-sized businesses reliant on DoD contracts find it extremely difficult to plan for and react to unpredictable defense budgets. Budget cuts, appropriation reprogramming, continuing resolutions, and long procurement cycles are particularly hard on small businesses dependent on DoD contracts.
Companies experiencing these issues indicate a strong interest in diversification to offset DoD market unpredictability. For these companies, their DoD market success is often attributable to having specialized techniques, capabilities, and patents that cannot be easily or legally imitated: their core competencies.
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Small and mid-sized businesses reliant on DoD contracts find it extremely difficult to plan for and react to unpredictable defense budgets. Budget cuts, appropriation reprogramming, continuing resolutions, and long procurement cycles are especially difficult on small businesses.
Companies experiencing these issues indicate a strong interest in diversification to offset DoD market unpredictability. For these companies, their DoD market success is often attributable to having specialized techniques, capabilities, and patents that cannot be easily or legally imitated: their core competencies.
What are Core Competencies? Core competencies are the unique capabilities and advantages that a company possesses that differentiate it from competitors. In the aerospace and defense industry, these might include advanced manufacturing techniques, proprietary technologies, or specialized expertise in areas such as avionics or defense systems.
Leveraging Core Competencies for Diversification A diversification strategy based on core competencies leverages a company’s unique competitive advantages. Here are some recommendations for companies contemplating diversification:
Focus on Business and Operating Models that Leverage Core Competencies: Align your business strategy with your strengths to maximize competitive advantage.
Establish Key Performance Indicators (KPI): Use KPIs to measure progress and make mid-course corrections.
Consider Business Models for B2B and B2C Markets: Explore different business models to expand your market reach.
Avoid Taking More Than One “Step” Outside Your Core Capabilities: To reduce risk, stay close to your core strengths.
Broaden Focus to Include New Technology: Integrate new technologies into your products and services to stay competitive.
Invest in Technical Training and Certifications: Address skill gaps to prepare your workforce for new challenges.
Fully Explore International Market Challenges: Understand and plan for the complexities of entering international markets.
Conclusion Diversifying based on core competencies is a strategic way to mitigate the unpredictability of DoD contracts and achieve sustainable growth. Professional guidance can ensure that your diversification strategy is well-planned and effectively executed, maximizing your return on investment while minimizing risks.
For more information or to discuss how to diversify your business based on core competencies, call us at +1 858.568.7788, use our contact form, or email via the CONTACT US button below.
Related Services
We offer several related consulting services, as listed below. We invite you to explore diversification further using these services.
M&A Integration Services: Enhance capabilities and expand markets through strategic acquisitions.
Adjacent Markets Services: Leverage core competencies to enter related markets and diversify offerings.
Commercial B2G Consulting Services: Navigate the complexities of government contracting and expand into public sector markets.
Market Analysis Services: Gain actionable insights with comprehensive market analysis for government and commercial markets.
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