collaborating with competitors. introduction alliance among competitors have risk one study estimate...
TRANSCRIPT
INTRODUCTION
Alliance among competitors have riskOne study estimate that U.S. company lost $50 billion a year in 1995
However alliances among competition are more popular, estimated 10-30 % of alliances in 2000
INTRODUCTION
He give a new term to describe the process of collaborating with competitor
“co-opetition”
Ray Noorda, CEO of Novell
Example of alliances involving co-operation
Ten years research program to reinvent the modern camera
Why Co- opetition is important1. The rise of the Internet and the
concomitant need for competitors to define and expand new market
2. The blurring of industry boundaries
Not all Co-opetitions are successSuccessBecauseThey can manage the balance between co-operation and conflict
FailBecauseLack awareness of cause and challenges of co-opetition
Drivers of Co-opetition
Competitor VS Non Competitior
The degree of competitive threat in order to set strategy
Motivation for collaboration among rival
Setting standard: Shift from heavy to high technology industry
Sharing risk : Developing ne innovation such as biotechnologies
Entering emerging market : New Customer and Low
cost production
Traditional Reason
Managing the Risks of Co-opetition
5 important risks- Technology leakage- Telegraphing Strategic Intention- Customer Defection- Slow Decision Making- Business or Asset Fire Sale
Risk 1: Technology Leakage Occurs when a partner use alliance
to acquire certain know-how, which is then use against you later
Risk 2 Telegraphing Strategic Intention
The risk is when your competitor knows your strategic plans
The direct transfer of information to partner
Solution
Managing the information for example,
1. Developing guideline for sharing information
2. Teach the manager what information is strategic
Risk 3 Customer Defection The competitor may get into contact
with your customer.
Partner might increase its brand awareness, customer understanding and direct personal relationship to steal customer away.
Solution
Never give full contact of customer to partner
Allow partner to access to customer only when selling jointly product
Solution
They should make the agreement on who are responsible in which area
Focus on basic of decision making identify the most important decision that define which decision maker will participate in those decision
Risk 5 Business or asset fire sale
create the risk of a fire sale firm will be force to sell its interest in
the alliance at a below market price. After they separate then the third
party will be much less in the asset once they tied up the joint venture