| Strategic repositioning refers to the organized efforts of defense contractors to "reposition" a technology that they have developed for a defense sector customer into a civilian or commercial market. The strategic repositioning model developed here is a structural model: it seeks to isolate the factors that influence choice of strategy, which in turn influences the organization's performance. The model draws from the prior experience of contractors (through interviews and surveys) and companies in other sectors (through a review of the relevant published research). (1) Over all, the model accounted for 55% of the variance in financial performance of the sample and 35% for the underlying population. (2) Key success factors include a rigorous planning process, a target market in the growth (vs. incubation) stage, a priority on market leadership as well as financial return, the ability to operate in an ambiguous business environment, and a relatively short time horizon but strong corporate support. (3) The greatest challenges that a contractor is likely to encounter are understanding his new customers' buying practices, strong competition, and adapting his technology to their needs and price expectations. (4) To address these issues contractors often involve partners in their entry strategy, but partnerships of equals tend to be more difficult to bring off than direct entry strategies. (5) The two major target market categories--government and commercial--present different challenges. Commercial customers are more likely to resist doing business with the contractor, while contractors entering government and other noncommercial markets are more likely to encounter price resistance, low technical sophistication among customers, and difficulties reaching their customer base. (6) Despite these differences across markets, performance is not influenced by the target market category, nor by the type of product or service or the contractor's functional orientation (marketing, technology, or operations). (7) The absence of a difference in performance may be partly due to natural selection. Noncommercial markets tend to attract contractors with more deliberative, consultative, and process-oriented corporate cultures, while commercial markets tend to attract contractors with results-oriented, opportunistic cultures. |
