DIVERSIFICATION STRATEGIES IN THE DEFENSE INDUSTRY

Abstract

Production activities in the Russian military-industrial complex (MIC) are characterized by high costs, a dependence on government orders, and the monopolization of sectors of the market for specialized products. Diversification, as a strategy for long-term development, will help overcome the traditional industry difficulties. Based on technological readiness, and their own innovative, networks, and resource potential, defense enterprises must choose the most effective option for diversification. The study identifies diversification scenarios for Russian defense enterprises and develops a matrix for choosing a diversification strategy depending on the external and internal environment. Approaches to understanding the specific features and problems of diversification of the Russian MIC are studied, and the factors the optimal diversification strategy are determined. The study uses graphical analysis and a diversification strategy matrix for defense industry enterprises at 20 large Russian defense enterprises. The matrix includes nine strategies based on the initial readiness of the technology for producing dual-use products according to the Tipner typology, as well as the innovative, network, and resource potential of the enterprise. Diversification strategies are relevant for the Russian defense industry for its long-term sustainable development. Each enterprise must choose a path based on technological readiness and its own core potential.