Big Industries Adjust to Economic Change

By Avi Shama. Avi Shama is a professor of management at the Robert O. Anderson School of Management, University of New Mexico. The was assisted Tim Meuret of the Anderson School of Management. | The Christian Science Monitor, January 8, 1993 | Go to article overview

Big Industries Adjust to Economic Change


Avi Shama. Avi Shama is a professor of management at the Robert O. Anderson School of Management, University of New Mexico. The was assisted Tim Meuret of the Anderson School of Management., The Christian Science Monitor


IT is by now widely accepted that by 1997 the United States defense budget will be cut by $60 billion to $90 billion and that 1 million to 2 million jobs may be lost. These cuts will reduce the procurement budget of the Department of Defense (DOD) by 29.4 percent - more than any other DOD spending category - and will drastically effect defense contractors, including more than 9,000 primary suppliers and more than 2,000 industry segments.

But these contractors can exploit the new economic agenda and adjust in other profitable ways. They are uniquely positioned to shape the evolving economic policy of the new Clinton administration to their own advantage. They can help define the strategies that the US will take from guns to butter.

For example, they can call for a large investment in infrastructure and bid on projects to build and upgrade roads, bridges, sewer systems, and so on, or take the following strategic measures to adjust to the declining US defense sector.

1. Downsize to meet demand - i.e., stick to areas of core competence and shed everything else. General Dynamics is a company using this strategy. Its chairman, William A. Andres, strongly believes that, "If we have cash General Dynamics can't invest in good, attractive core defense programs with decent return, rather than add diversified volume just to look bigger, I believe we should return excess cash to shareholders."

2. Diversify into related specialties. An example is that of Science and Engineering Associates, Inc. (SEA), a small defense consulting firm in Albuquerque, N.M. When, in the fall of 1989, SEA realized that the defense business would be shrinking, its management began looking for stable, profitable areas. As Gilbert L. Ziegler, SEA's senior scientific engineer, explains, "We had two choices. We could exhibit the desert spider syndrome, staying in our hole and reacting to muffled changes coming to our hole, or stick our head out, make sense of the changes we see, and take a beneficial course of action."

Mr. Ziegler's group was successful in specializing in the regulatory aspects of the same design services it previously provided for DOD.

3. Commercialize. Raytheon's decision to continue to produce guns and a lot more butter fits this strategy as described in the five-year plan of Dennis J. Picard, Raytheon's chairman. Other examples include ARO Corporation, which capitalized on its technology to market a product that tests the strength of seals on plastic packages for sterilized medical tools; the defense group of Westinghouse Electric, which adapted its military aircraft sensor for air traffic control and for speed-sorting of mail; and the electronic systems sector of Harris Corporation, which drew on its military high-frequency radio equipment to sell air-traffic control systems to the Federal Aviation Administration. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Big Industries Adjust to Economic Change
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.