Coopetition
The synthesis of Cooperation and Competition
Why coopetition?
Burger King vs McDonalds
Coopetition definition
Coopetition describes how organisations cooperate with business stakeholders in order to pursue profits (Luo, 2004).
- Cooperation and Competition
- Based on the theory that in addition to businesses that compete for suppliers and customers, there are providers of complementary products and services
- Relationships in business don't have to be win-lose. Sometimes both parties can win.
- Coopetition occurs when companies collaborate in areas of their business where they do not believe they have competitive advantage and where they believe they can share common costs
- Closely related to Game Theory
The Value Net
They suggest therefore the concept of value net, which places a single company between customers and suppliers (= vertical dimension) who can be either complementors or competitors (= horizontal dimension)
By combining business strategy and Game Theory, these authors argue that it is better for competitors to work together rather than go up against each other in contest.
Co-opetition (or coopetition) combines the advantages of both competition and cooperation into a new dynamic model called the Value Net Model, which is largely an elaboration of Porter’s Five Forces Model.
Main principle
Industry players should therefore focus more on ‘growing the pie’ than ‘splitting up the pie’.
After all, it’s better to own 20 percent market share of a $10 billion market than to own a 75 percent share of a $2 billion market.
Real long-term business success comes not solely from competing successfully within your current industry (playing the game), but also from being an active participant in shaping the industry’s future (changing the game to your own advantage).
Parts approach
Since Coopetition flows from Game Theory, Brandenburger and Nalebuff suggest to view your company’s strategy formulation process as a game.
Drawing the Value Net is just the first step towards changing the game.
The next step is to identify all the elements of the game which consists of five components, using the acronym PARTS:
Drawing the Value Net is just the first step towards changing the game.
The next step is to identify all the elements of the game which consists of five components, using the acronym PARTS:
- Players - ask yourself who the players are in the game and divide them into Customers, Suppliers, Competitors and Complementors.
- Added value - added value measures what each player, in each role, brings to the table.
- Rules - each industry and market has rules and regulations.
- Tactics - what actions can one player take to shape the strategies, actions and perceptions of other players in the market?
- Scope - industries are often not isolated, but linked to other industries instead.
Coopetition advantages
- Capabilities
- Risk and uncertainty reduction
- Cost reduction
- Relevant resources
- Create common technologies
- A uniform voice in the market place
- A successfully win-win strategy to expand market
- SMEs' collective ability to deal with olipology
Coopetition disadvantages
- Opportunistic behaviour
- Power imbalance
- Information
- Risk on know-how leaking
- Coordination challenges and tension management
- Issues of trust, commitment and opportunism
- Loss of control
Microsoft & Apple
In launching Apple's version of office program, Microsoft CEO “Satya Nadella” said : Microsoft adopts new management approach based on the understanding that collaboration with Microsoft's competitors is essential to ensuring its growth and maintaining its relevance
American & delta
- The two airlines American and Delta airlines “Who are in a tough competition in the arena of ticket sales” Join hands in research and development against Boeing (Which is a provider of both)
- This move saves them very high costs when
Team
Tawfeeq Agbariah
Employeer Department Manager
at Synergy Occupational Encouragement
Soher Shobash
Manager
at Mercantile Bank
Luba Landman
Medical representative
at Sanofi
Ludmila Konovalenko
Sr. Manager SW Verification Group
at Mellanox Technologies
