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The military-industrial complex restructuring

Vol. 22, Iss. 47, DECEMBER 2016

PDF  Article PDF Version

Received: 21 September 2016

Received in revised form: 11 November 2016

Accepted: 1 December 2016

Available online: 24 December 2016

Subject Heading: SCHOLAR DISPUTE

JEL Classification: G34, L19, L93, O33, O57

Pages: 47-62

Sobolev L.B. Moscow Aviation Institute, Moscow, Russian Federation
sobolevLB@yandex.ru

Subject The article considers enhancement of economic efficiency of Russian arms manufacturers through using the business models of global leaders and their vying strategies.
Objectives The aim of the study is to compare restructuring methods of leading Western and Russian companies engaged in development and manufacture of weapons and military equipment.
Methods The study rests on a comparative analysis of Western and Russian leading arms manufacturers and their restructuring methods under instability of the countries' military budgets. The analysis is based on the annual rating data of world arms manufacturers, presented by the Stockholm International Peace Research Institute (SIPRI), and publications in public sources.
Results The analysis shows that Russian companies operating in the military-industrial complex make only first steps towards creation of a globally competitive organization. Subsequent steps should be a segmentation of companies based on product and/or region (for cost saving), and reduction of their dependency on Defense Procurement through creation of robust civil segments (electronics, oil and gas and power equipment, etc.).
Conclusions and Relevance Under fierce competition in the global weapons and military equipment market, it is possible to create alternative business structures of corporations operating in the Russian military-industrial complex (using the experience of Joint-Stock Financial Corporation Sistema), enhance cooperation with companies of fuel and energy complex, develop internal competition in the country.

Keywords: military- industrial complex, restructuring, conversion, business segment, diversification

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