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SLEEPING WITH THE ENEMY: Doing Business with a Competitor
Author: Barbara A. Carlin, Michael J. Dowling, William D. Roering, John Wyman, John Kalinoglou and Greg
Clyburn
Anthony Kojo Ayivi
Sajeewani Ponnamperuma Arachchige
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Forming relationship with a competitor
•Multifaceted relationships
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… With Enemy
Technology: Only supplier of specific parts Regulation Legal Requirement
Globalization: do business in other countries
Size and Structure: - More Diversification leads to different market
Outsourcing -increasing trend of outsourcing
Products: More opportunities with linkages
Driving Forces: Why Do Business with Enemy
Firm’s image: Improves doing business with market Leader
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Why important? : Rewards and Risks
• Relationships with suppliers/ customers give benefits in business
• Sharing information with them without being endangering its competitive position is very important
• It has became an increasingly important issue in global business
BUT must be managed well because of ….
• Some drawbacks– risk of giving information
– risk of crossing the line between cagey negotiations and unethical behaviors
– Difficult to justify the cost of centralizing management
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Types of Multifaceted Relationships
1. Buyer-Supplier in Direct Competition Eg: IBM and Intel
Firm A Intel
(supplier)
Firm B IBM
(Buyer)
ProductSuper
computers
ProductSuper
computers
Microprocessors
Competition in the Market
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Types of Multifaceted Relationships
2. Partners in Competition
Eg: IBM and Apple
Firm A IBM
Firm B Apple
ProductPersonal
computers
ProductPersonal
computers
Joint venture to create New PC Operating System
Competition in the Market
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Types of Multifaceted Relationships
3. Buyer-Supplier in Indirect Competition
Eg: Microsoft and Apple
Legal Microsoft
defending lawsuit
Legal Apple suing Microsoft
Firm AMicrosoft (Supplier)
Firm BApple
(Buyer)
Competition in Legal Arena
Competition in the Market
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How to Manage Multifaceted Relationships
Management strategies ranging from complete avoidance to total involvement
1. Stay away or get out: costly
2. Divide and conquer: separating interactions with competitor– having different departments or divisions
– using product or geographic divisions by large companies
– Can behave as there is no relationship
Best strategy for companies engaged unwillingly in relationships or cultures and leadership emphasize competition rather than collaboration
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How to Manage Multifaceted Relationships
3. Centralize Intelligence– increase benefits of multifaceted relationship
– manage risk of coordination
– combine information to see what can be learned:
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Sources Story: BellSouth Corporation
Moved from: Traditional approach - Decentralized
To: Centralized Approach
• Enhanced Information sharing and
• Helped improve overall business effectiveness and Efficiency
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Conclusion
• All firms should launch multifaceted relationships– Efficient, high quality supply or best prices
– Improve decision making
Companies with tolerance of risk, culture of understanding collaboration, corporate strategy of emphasizing new opportunities flexible leadership will be successful in centralizing information
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References
Dawling, M. J., Carlin, B. A., Roering, W. D., Wyman, J., Kalinoglou, J., & Clyburn, G. (1994). Sleeping with the Enemy: Doing Business with a Competitor. Business Horizon , 37 (5), 9-15.
Turban, E., Sharda, R., Delen, D., & King, D. (2011). Business Intelligence: A Managerial Approach (International Edition ed.). New Jersey, USA: Person Education Inc.
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