Porter’s 5 Forces

Barriers to Entry: While the Army aviation branch in general does not produce a product per se, potential suppliers to the Army typically gain lucrative contracts once they are selected. However, one of the largest obstacles suppliers face when entering this market is government regulations. Government regulations place restrictions on what type of contracts can be obtained and how the contracted company can implement it. This limits not only the Army but the rest of the branches of the military from being a more competitive marketplace between them. For example, if a contracted company is trying to add its own employees to do the work in a contract, then the amount of employees the company is adding needs to coincide with the current manpower of the aviation branch. This is to prevent contract workers from having more priority than the Army’s service members. These restrictions can restrict some companies from entering the market because these companies may not have the time or expertise to navigate the many regulations that are in place by the government. In turn, this ultimately limits the competition that could exist between the Army and other military branches in obtaining suppliers. Rivalry of Existing Firms: The aviation branch is always in constant competition with other military branches aviation branches when it comes to obtaining the latest technology and equipment. For the military in general, most of this comes from the civilian sector by awarding contracts. Due to two recent wars, competition between the military branches has increased. Additionally, awarding contracts to civilian companies has grown substantially in order to meet the new demands placed on the Army’s aviation branch. To do this, the Army’s aviation branch has had to stay ahead of the other military branches by approaching civilian companies and offering to award contracts in areas that it needs help in. This is a departure from the past in which civilian companies would approach the military first with a proposal in order to obtain a contract. By reaching out to a company first, the Army has a higher percentage of acquiring a certain product that the company produces as well as purchasing it at a more reasonable rate. Bargaining Power of Buyers: As the aviation branch has switched to a more proactive role in expressing to companies what needs it needs met, civilian companies have become more in the position of power. Companies are now able to browse potential contracts based on their capabilities and how long and profitable the contract will be. Furthermore, if the product the company produces is proprietary, this places the company at an even greater advantage as the Army may be more willing to negotiate better terms for the company. Threat of Substitutes: One of the challenges the aviation branch faces is other civilian aviation firms that offer suppliers better terms without the added baggage of government regulations. Companies that may be discouraged by government regulations could turn to these other aviation firms. Additionally, civilian aviation firms have larger available budgets on hand to allow for larger contract payouts than the military can provide. This could cut the amount of accepted contracts made by the aviation branch and may lead to goals and priorities being missed.