Professional Documents
Culture Documents
Dissertation Student E
Dissertation Student E
September 2015
Declaration of Originality
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“I, the undersigned, declare that this dissertation is the result of my own
independent and original investigation and that all sources are duly
acknowledged in the reference list.
Signed:
Date:
Abstract
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The aim of this research paper is to examine the role of coopetition for SMEs in the
UK alpaca industry. It will investigate five key research questions, which are: ‘What
are the main motives of coopetition for SMEs?’; ‘Why do SMEs engage in
coopetition?’; ‘Does coopetition benefit SMEs?’; ‘Does coopetition benefit the
market?’ and, ‘What are the limitations of coopetition for SMEs?’ This study has used
qualitative methods in order to gather information, combining semi-structured face-
to-face and telephone interviews. The results were then analysed using thematic
analysis. The current literature has seen a trend in examining the role of coopetition
for SMEs. However, the industries covered so far have predominantly been
information and technology-based. The agricultural industry only represents 3% of
coopetition papers. The aim of this study is to understand the transferability of
coopetition outside of the main industries studied. The main findings of this research
are that the results support the literature and the propositions. The findings are
transferable to theory. The main motives of coopetition were found to be the
reduction of the financial risk, which is supported by the literature. There were also
some industry-specific findings. These included the location of breeders as well as
the risk of disease, predominantly bovine tuberculosis. In terms of limitations, this
study is relatively small in its research sample. However, this is reflective of the
current state of the UK alpaca industry, which is still in its early stages and growing.
It shows evidence of coopetitive activities in this industry. To increase understanding
of coopetition, it is recommended that further studies be conducted to expand the
research market and examine the more established US and Australian markets.
Contents
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Section Number Section Page
i Declaration of Originality 2
ii Abstract 3
1 Introduction 7-8
2 Methodology 9-13
4 Results 30-43
5 Discussion 44-56
6 Conclusions 57
8 References 59-66
9 Appendices 67-
157
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Figure 1, the concept of the prisoners dilemma to highlight the producer’s
choice, Kay (1993)
Figure 2, Value Net, Brandenburger (1996)
Figure 3, The prisoner’s Dilemma, Kay (1993)
Figure 4, Thematic map of Motives of Coopetition.
Figure 5, Thematic extract of interview.
Figure 6, Thematic extract of interview.
Figure 7, Thematic map of Why firms engage in coopetition.
Figure 8, Thematic extract of interview.
Figure 9, Thematic extract of interview.
Figure 10, Thematic extract of interview.
Figure 11, Thematic extract of interview.
Figure 12, Thematic extract of interview.
Figure 13, Thematic extract of interview.
Figure 14, Thematic extract of interview.
Figure 15, Thematic extract of interview.
Figure 15, Thematic extract of interview.
Figure 16, Thematic extract of interview.
Figure 17, Thematic extract of interview.
Figure 18, Thematic map of Limitations of Coopetition.
Figure 19, Thematic extract of interview.
Figure 20, Thematic extract of interview.
Figure 22, table of results of subject 1.
Figure 23, table of results of subject 2.
Figure 24, table of results of subject 3.
Figure 25, table of results of subject 4.
Figure 26, collective results table of the motives of coopetition sorted by data
subject.
Figure 27, collective results table of the motives of coopetition sorted by data
subject.
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Figure 28, collective results table of the motives of coopetition sorted by data
subject.
Figure 29, collective results table of the motives of coopetition sorted by data
subject.
Figure 30, collective results table of the motives of coopetition sorted by data
subject.
Figure 31, collective results table of the motives of coopetition sorted by data
subject.
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1. Introduction
The study of coopetition has been developing over recent years. The concept of
coopetition has been predominantly applied to technology and information-based
industries, with a recent trend in literature that has expanded into developing an
understanding of the use of competition for SMEs. Coopetition offers SMEs access
to resources that enables them to improve financial performance as well as develop
the overall market. Previous research has identified that coopetition is suitable for
SMEs due to the high amount of mutual benefit that coopetition with an SME
provides. This paper studies the main motives and benefits of coopetition for SMEs
in a non-information-based industry. The industry the research will study is the
agricultural sector; specifically, the UK alpaca industry. The reason for studying this
particular industry is due to the expansive nature of the industry in the UK as well as
the presence of coopetitive activities. The problem addressed is to examine the main
motives of coopetition and whether this benefits individual SMEs in the UK alpaca
industry as well as the wider market. The findings will provide further application for
the theory of coopetition as well as expanding the literature on the main motives and
benefits of coopetition. The objective of the study is to investigate coopetition for
SMEs in the UK alpaca industry based on the research questions. It will analyse the
main motives of coopetition for SMEs. These motives will initially be derived from the
literature and propositions. They will then be tested against the data collected, which
will support or expand the current knowledge. Understanding why firms engage in
coopetition will contribute to a key objective of the study. In addition, the study will
seek to understand the main benefits of coopetition for the firm as well as for the
market. The final objective will be to understand the limiting factors of coopetition.
The study is important due to the limited expansion of literature into non-information
and technology-based industries. Agricultural industries are only representative of
3% of coopetition literature (Czakon, 2014). Studying the agricultural industry further
will help to examine coopetition as a strategy in a competitive market.
In terms of pertinent literature, there are key papers that have been examined for this
study, firstly examining the transferability of coopetition theory to SMEs (Bengtsson,
2012). Reducing financial risk is a primary motive of coopetition (Eriksson, 2011).
The reason for coopetition is identified as being an economic rent-gaining strategy in
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order to add value and improve financial performance (Geraudel, 2014). The benefits
of coopetition for SMEs include being able to access rent-gaining resources,
(Tidstrom, 2009). Improved financial performance is a primary benefit of coopetition
for SMEs (Morris, 2007). Another paper which relates to this study covers the
improved level of quality of products through coopetitive activities (Gurnani, (2007).
The main benefit of coopetition for the market is the improved standardised quality of
products (Bagshaw, 2001). In terms of the limiting factors of coopetition, trust was
the primary factor (Chin, 2008). The proposition of this paper is that the main motives
of coopetition are to reduce the financial risk of seeking rent-gaining strategies. The
other key propositions forming the main benefits of coopetition for the firm are
improved financial performance and improved quality of the products produced. The
benefits for the market are expected to include an overall improvement of the
standardisation of products, growing the market as well as developing new markets.
The methods used in this study were open telephone and face-to-face interviews.
Telephone interviews were conducted due to the geographical location of some
subjects. The data was analysed and coded with thematic analysis; thematic
diagrams depicting the key results were also created. Previous studies have
examined the role of coopetition for SMEs, mostly in information and technology-
based studies. The conclusions have been that coopetitive theory is transferable to
SMEs. The main findings of this research support the propositions; the findings are
transferable to previous literature and the theory. The findings of this research help
to contribute to a larger field of coopetition by expanding the knowledge into an
unusual industry and identifying the suitability of coopetition for SMEs; all the
subjects are involved with coopetitive activities. The research also shows the
transferability of coopetitive theory outside of the industries in the literature. The
conclusions of this study are that coopetition is beneficial for SMEs as well as for the
market. It provides an achievable strategy for adding value. In terms of further study
and unanswered questions, the small sample of the study means that expanding the
sample and the market, including more developed markets such as Australia and the
USA, would help to improve the understanding of coopetition for SMEs including the
motives, benefits and the limitations.
2. Methodology
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2.1 Research Design
The problem that this paper will address concerns five key questions. The first
question is: ‘What are the motives of coopetition in the UK alpaca industry?’
Secondly: ‘Why do SMEs in the UK alpaca industry engage in coopetition’? Thirdly,
‘Does coopetition benefit SMEs?’ Fourthly: ‘Does coopetition benefit the market?’
Finally, the fifth research question asks: ‘What are the limitations of coopetition?’
This paper will test the proposition that the key motives include mutual benefits by
increasing market share and growth, as well as reducing financial risk by increasing
the quality levels of alpaca fibre through joint ownership of stud males. Further
propositions to be tested include that SMEs benefit from engaging in coopetition in
the UK alpaca industry by improving access to complementary resources as well as
improving financial performance. Another expectation is that the market benefits
from improved fibre quality through innovative breeding programmes from
coopetitive co-owning. The final proposition is that a limitation factor of coopetition
includes the trust level between coopetitors and the level of commitment between
them, including once coopetition ends if both breeders benefit from coopetitive
activities.
The particular case of examining coopetition in the UK alpaca industry has not been
done previously. This is an opportunity to extend the understanding of coopetition
outside of the normal literature on large-scale, information-based organisations.
Primary data is required to examine propositions if the data is not available
(Creswell, 2002). Due to secondary data not being available for this particular case,
it is necessary to conduct primary research. The literature surrounding coopetition
does not feature in this particular industry, or focus on the propositions put forward
for SMEs. This paper will enable a greater understanding of the benefits and motives
surrounding coopetition for SMEs. The case of the UK alpaca industry is unique
because the growth of the UK market follows a different pattern to other markets
such as Australia and the USA. Investigating coopetition in this particular industry
offers an opportunity to study the suitability of coopetition for a young, growing
industry. An area that demonstrates the uniqueness of this industry is co-ownership
of stud males, which helps improve the overall market standard as well as the
organisation’s own stock. A unique aspect of this case is that the organisations
taking part in coopetition activities are relatively small-scale, due to the current size
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of the market. Most studies into coopetition have examined larger markets and
organisations. The key areas to learn from this case link to the propositions as well
as matching the suitability of coopetition in other industries. It is beneficial to explore
this industry due to the evidence of coopetition.
In order to investigate the propositions and problems put forward and addressed by
this study, it is important to adopt a qualitative approach to enable an in-depth
analysis, given the small number of companies represented in this study. Bryman
and Bell (2007) explain that qualitative research is a suitable method for business
research due to the need to collect information to respond to a proposition. The
method selected for this research is to conduct both face-to-face and telephone
interviews with open-ended questions. The reason for conducting both interview
formats is for logistical reasons, due to the location of some of the interviewees
(Stephens, 2007). Importantly, telephone interviews allowed for a greater spread of
research subjects. Those located closer were interviewed face-to-face. Both
interview types followed the same questions, structure and analysis process. This
method was selected in order to understand the motives for coopetition, which may
not be established through questionnaires or quantitative surveying. Open-ended
questioning also allows for a detailed analysis, which will help to answer the
propositions of this paper (Geer, 1988). Questionnaires are not suitable for this study
due to their limited scope and the small number of organisations in this industry,
which allows for more in-depth interviews (Patton, 2005). This study uses a
deductive approach, examining the literature as well as collecting primary data.
Using the deductive approach is the most suitable approach for this study due to the
wide scope of the theory of co-opetition. Qualitative research will gather a large
range of data (Hyde, 2000). This study will interview four representatives of SME
breeders in the UK alpaca industry. Due to the nature of the industry, these
interviews will be representative of the industry as a whole. Additional data in this
study are from secondary sources. These include relevant coopetition literature but
also company websites and publications to examine any role of coopetition evident
in the industry. The primary data will be detailed research into the UK alpaca
industry, which does not feature in coopetition literature. The four SME breeders
being interviewed are the owners of the representative companies. Due to the lack of
research of coopetition in SMEs in smaller industries, qualitative research is more
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appropriate in order to examine the industry in detail (Barbour, 2008). Qualitative
research is paramount to understand the reasons behind a problem, whereas
quantitative methods would focus on a purely numerical evaluation (Gunnarson,
2002). This study follows a deductive approach by testing the propositions put
forward. A deductive approach is necessary to test a hypothesis. Since the
propositions are being developed around an existing theory, it is necessary to test
them rather than develop a theory (Pathirage, 2008).
The questions asked in these interviews will be constructed in order to help address
the problem as well as to analyse the propositions (Turner, 2010). The questions will
fit key categories, firstly to categorise the size of the organisation, then the extent to
which coopetition is evident. Once this has been established, there will be detailed
questioning to understand why the organisations engaged in coopetition, as well as
examining whether they benefited or not as a result. There will also be reflections on
the competitive environment overall of the UK alpaca industry, as well as analysis of
the benefits coopetition offers to the industry overall. The questions will also examine
the limiting factors of coopetition, understanding how firms select coopetition and
who with, and any insight into any failures of coopetition. If the organisation has
ceased to be coopetitive or has not been so, there will be investigations as to why
this occurred, in order to best understand the benefits of a coopetitive strategy. The
flow of the questions will firstly enable a detailed analysis thanks to the open-ended
nature of the questions. It will also allow details to feature that may not be directly
asked in the questions (Robin, 2003). The questions will allow the benefits and
motives of coopetition to be measured, which is necessary to test the propositions.
Each respondent was asked the same questions to provide consistency. The
interviews followed an in-depth approach in order to combine consistency with
flexibility (McConnell, 2003). This was achieved through the small number of
interviews conducted and the requirement to have a detailed understanding of the
case of coopetition in the UK alpaca industry. The semi-structured face-to-face and
telephone interview approach was selected in order to provide adaptability to each
interview. Open-ended questions will encourage more data to be extracted from the
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subject as well as covering aspects that may not have been covered by more
structured and restricted questions (Patton, 2005).
The subjects of the interviews were selected based on the companies they
represent. These specific companies were selected by examining successful SMEs
in the UK alpaca industry, based on industry presence and size. In order to prepare
the subjects, appointments for the interviews were pre-arranged, as well as a brief
overview of the subject matter including a sample of the questions that would be
asked, to create transparency and improve their ability to prepare their responses.
The people interviewed have not been named in this paper in order to protect their
identities. Confidentiality is crucial to a study, as private business information is
discussed in interviews (Tolich, 2004).
The aim of research creates a conflict between maintaining privacy and answering
the propositions of a study to gather detailed information. In order to establish a level
of trust with respondents, the reasons for the study and motives behind the topic
were discussed in order to improve the relationship (Orb, 2001). The motives behind
a study will increase the likelihood for a respondent to respond positively to the
questions (Jones, 2003). This particular topic does not handle sensitive information
or distressing material.
In order to protect the data and identity of the respondents, the information will be
deleted following the submission of the study.
The data has been measured through recorded in-depth interviews. The interviews
have then been written into a transcript, which has allowed detailed analysis to
compare and contrast the interviews (Burnard, 1991). The transcripts were coded
with thematic analysis, including both tables and thematic maps, in order to organise
key themes and condense the findings of the research to develop and group the
information needed to test the propositions. Coding qualitative data provides an
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effective measure for testing propositions and sorting data to analyse trends and
themes (Miller, 2013).
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3. Literature Review
The use of coopetitive strategies for SMEs has been expanding in recent years. The
covered topics of coopetition have been predominantly in high-tech, information-
based sectors (Czakon, 2014). To understand the reason for coopetition being used
for SMEs and its applicability for non-high-tech industries, this study will assess
coopetition for SMEs in the UK alpaca industry, which fits the criteria of a non-high-
tech industry.
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researching coopetition within this industry (Czakon, 2014). Investigating the role of
coopetition for SMEs in an agricultural sector will help to further examine the theory
of coopetition.
The literature discusses the key motives for coopetition with an increasing focus on
its role for SMEs. The motives of coopetition are seen to be transferrable between
firms of different sizes, (Bengtsson, 2012), and these motives will form a theory to be
tested with primary research. The theory of co-opetition is where a competitor
cooperates with another for mutual benefit. Mutual benefit is a primary theme of
coopetition (Brandenburger, 1996). It is a key motive for the implementation of a
cooperative strategy. Coordinating activities for a mutual benefit should be a key
strategy to be implemented by competitors in order for both parties to benefit as well
as improve the market (Zineldin, 2004). Coopetition acts as a strategy that enables
firms to survive in a competitive market, by combining resources in order to innovate
and achieve both internal and external benefits. Primarily, it allows organisations to
access economic rent-gaining resources and access economies of scale while
reducing the risk of pursuing these strategies (Cygler, 2014)
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A main motive for coopetition is the concept of complements, whereby
complementing one another rather than competing will aid market growth rather than
diminish it. This means that firms can mutually contribute to expanding the industry
rather than undercutting one another’s business (Brandenburger, 1996). Coopetition
can create synergy between the parties involved through well-managed strategies
targeting select programmes of coopetition (Zineldin, 2004). High levels of
competition and possible imitation will cause the competitive advantage and rent to
be lost (Grant, 1991). The underlying theory extends to game theory, where
coopetition can mutually increase the total market value (Brandenburger, 1996). This
shows the cooperative element and individually captures the value to the firm and
demonstrates a competitive element. One of the key motives for coopetition is to
increase the size of the current market or create a new market. This includes
improving the product range offered or creating new products (Bederos, 2004). By
improving the current market position in order to compete with foreign markets,
coopetition seems to be a viable strategic option that provides mutual benefit for
SMEs as well as the market as a whole. A further motive for coopetition is sharing
the risks and costs of entering or strengthening the market. For coopetition to be
successful, firms need to have complementary resources that can easily be shared
between them (Das, 2000). Sharing information is another motive for coopetition.
Sharing information unique to a firm allows coopetitive firms to gain knowledge that
will improve their position as well as potentially acquiring new skills (Schiavone,
2015). A further motive is that firms seek to use fewer resources or increase the
efficiency of their resource allocation (Dussage, 2000). Coopetition will enable
improved efficiency through greater access to complementary resources and
knowledge (Cuervo-Cazurra, 2015). Firms that integrate similar resources can share
risks while increasing resource utilisation through coopetition (Garrette, 2009).
Another motive of coopetition includes firms protecting their current market share as
well as increasing their overall market share (Gnyawali, 2008). Coopetition is more
evident for larger organisations, typically in information and technology-based
industries (Gnyawali, 2008). However, SMEs can also benefit from coopetition.
Cooperating with competitors will improve their market position as well as increase
innovation, which can improve their competitiveness overall. SMEs and younger
industries can gain similar benefits (Morris, 2007). This is also echoed by Czakon
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(2014) explaining that coopetition acts as a key strategy to reduce risk and to
increase performance and efficiency.
Risk reduction is a key motive for conducting coopetition, which is a mutual benefit
for both parties, as the risk is shared (Dittrich, 2007). This risk reduction allows for
promotion of overall market growth (Gnyawali, 2009). The companies to be
examined for this paper will fit under the SME category. Coopetition is an effective
strategy tool for SMEs as well as new industries (Morris, 2007). Market uncertainty
is a key element for coopetition for firms to reduce their risk, in order to improve the
market environment for mutual benefit (Ritala, 2012).
The first proposition of the paper concerns the motives of coopetition. From the
study, it is expected that the motives identified from the literature, which include
motives for larger firms, will be transferable to SMEs. The primary expected motive is
that coopetition is undertaken to reduce risk, including the financial risk of improving
performance and the market. Reducing risk is expected to be a key feature of the
data, because reducing risks from the financial costs of innovation and ventures
enables the pursuit of economies of scale and improves performance. Risk reduction
also allows new markets to be developed, which will be a key element examined by
the study as a motive of coopetition. The risk of ventures failing is also spread
between the parties involved. Mutual benefit is expected to be a primary theme and
motive for coopetition. It is expected that the mutual benefit for the parties is
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improved market performance and innovation, as well as increased competitiveness.
Another key motive is expected to be complementing, which will allow the market to
grow overall rather than high levels of competition, which may cause the market
growth to slow and any potential economic rent to be lost. Improving the market
both through growing the market and improving quality standardisation are expected
to be key motives and themes in the study. Other expected key motives include
protecting current market positions as well as gaining knowledge in order to improve
performance.
The main reasons that lead to coopetition include the pursuit of economic rent-
gaining resources as well as strengthening the position of the market overall
(Geraudel, 2014). Another core reason for coopetition is dependency due to the
structure of the market; this includes the abundance of complementary resources
that are transferable between competitors and common goals (Bengtsson, 2000). In
terms of the reasons for coopetition for SMEs, the key aims include strengthening
the competitiveness of their industry through improving the quality produced, as well
as increasing the profitability and reducing the costs by sharing the risk through
coopetition (Gurnani, (2007). Coopetition is increasingly vital for SMEs due to the
need to develop and obtain access to resources (Tidstrom, 2009).
Coopetition as a successful strategy for SMEs is apparent with the improved access
to complementary resources through coopetition. It allows SMEs to improve their
competitive position (Lechner, 2014). A feature of coopetition is choosing coopetition
rather than fierce competition. Undercutting and fierce competition is not a
sustainable tactic, as competing on price will not promote customer loyalty. This
means that customers will rely on low prices rather than reputation. If the firm cannot
sustain undercutting, its profitability will diminish (Brandenburger, 1996). Added
value can be gained through reputation using the firm’s commercial capabilities and
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its reputation with its consumers. A firm may build on its reputation by producing
quality goods and services for its consumers to help it gain sustained competitive
advantage. A good reputation is valuable for a long-term relationship between the
consumer and the firm, and can only be built over time as the consumer gains
experience from the goods purchased over a long period. There is an issue with
reputation and the balance required to improve the consumer/buyer relationship.
Using the producer’s choice (if they were to oversell, with the seller producing low-
quality goods for a high price) would not benefit the consumer, therefore this may
affect a firm’s reputation. This is then linked with underselling. Kay (1993) illustrates
that this is where a high-quality good is sold for a low price, which is good for the
consumer but will reduce the profitability of the firm. The importance of establishing a
good reputation justifies the use of coopetition to mutually benefit competitors,
enabling them to improve their services as well as their consumer relationship (Kay,
1993). Coopetition can improve the brand image of mutual parties through joint
improvements. The importance of reputation builds links to the sustainable growth of
organisations, including SMEs (Rodrigues, 2011).
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Figure 1, the concept of the prisoner’s dilemma to highlight the producer’s choice,
Kay (1993)
There are four types of rent-seeking strategies. One is monopolistic behaviour, which
is neither competitive nor cooperative as it means that the organisation is in control
of the market. The second type is cooperative whereby organisations cooperate with
other industries. This may weaken their position if others adopt a competitive
attitude. The third type is competitive, which may cause economic rents to be
reduced to zero through the market share being reduced. Finally, there is
coopetition, which exhibits competitive and cooperative elements by limiting the level
of cooperation and strengthening the industry. Using resource-based theory and
social theory to compete and cooperate had been regarded as a continuum;
however, they are separate dimensions (Lado, 1997).
Kock (2000) echoes the work of Brandenburger (1996) that cooperation and
competition are both vital in sustaining relationships with competitors. For example,
competitors will push and pressure innovation and differentiation of services and
products, whereas cooperation will also aid development, but this will be through
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ease of access to resources rather than pressure. Coopetition means that there is a
harmony of both competition and cooperation. Coopetition adds value for the firm
because it will allow access to information and skills that would be inaccessible if it
competed (Kock, 2000). Coopetition is an economic and non-economic exchange
between firms, which means that they compete in some activities but cooperate in
others. This enables an increase in economic rent (Bengtsson and Kock, 1999).
A key feature of coopetition is the level of cooperation that occurs, including the level
of information and transparency of operations. The level of information obtained by
the competitor will influence decisions and will alter their perspectives. Competition is
vital for sustained growth because it promotes development as well as consumer
recognition. The value net is a key opportunity for cooperation amongst competitors.
Figure 2 highlights the depiction of the value net. It shows the interdependent
relationship between the four areas. The four parties involved include customers,
competitors, complementors and suppliers. The value net highlights the need for
cooperation amongst the players; this means that the firm must benefit other parts of
the net to be successful, due to the interconnected relationship. If a firm strives for
economic rents, it should combine competitive and cooperative strategies defining
the requirement for coopetition (Brandenburger, 1996).
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Figure 2, The Value Net, Brandenburger (1996)
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compete in major markets, (Morris, 2007). SMEs may gain not only financial benefit
from coopetition but also strategic advances that improve the competitive position of
the organisation, which aids firm objectives such as company growth (Morris, 2007).
Coopetition can provide a key strategy for organisations to improve their market
share through strengthening the market (Morris, 2007). Coopetition can enable an
increased market share as well as improving and sharing complementary internal
resources that may promote economic rent. Trust and commitment levels may mean
coopetition does not benefit the organisation (Chin, 2008). The level of trust and
commitment underpin a successful or unsuccessful relationship due to risk and
resources being shared. The only key failure will be if one party benefits more than
the other does to an extent that will cause an imbalance of competitiveness.
However, in the case of SMEs, this risk is lower as the SMEs are of similar size. This
is crucial to maintain fairness, which will improve the long-term effectiveness as well
as competiveness of both parties (Morris, 2007). Another benefit for the participating
coopetitive firms is that there is an improvement in innovation from shared
information (Park, 2014).
An underlying benefit of coopetition for both the organisation and the market is the
increased quality level of products that it can create. This is achieved through
investment in quality improvements and in new product innovation to raise quality in
individual firms and the market (Bagshaw, 2001). Coopetition reduces financial risk,
allowing organisations to invest in areas that would otherwise be of higher risk
(Gurnani, (2007). The concept of increased quality is a foundation of coopetition,
which allows the expenses of research and development to be shared in order to
improve access and the universal quality benchmarks of the market (Okura, 2014).
This in turn improves the competitiveness of the firms, their financial performance
and market growth (Gee, 2000). Coopetition can promote the overall industry
productivity through greater access to complementary resources and expansion
through innovation (Hua, 2003). In addition, less capital involvement is needed to
increase quality levels.
Coopetition may hinder innovation if the resources developed by their rival are
irrelevant (Mention, 2011). For coopetition to be successful for both players, the
activities of cooperation and competition need to be clearly separated to avoid
distrust and ensure that enough information is shared (Bengtsson, 2000).
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Cooperation may not be constant due to other activities requiring competition (Luo,
2007). This may be relevant when ventures into new markets are undertaken but
elsewhere competition is still occurring. Cooperation is maintained until the peak of
its usefulness is reached. This is usually the point at which competitors will opt to
separate their activities from their competitor rather than continue coopetition and
cooperation. A feature of coopetition is identifying the link and balance between
cooperation and competition (Bunge, 1976). Lacomba (2011) defines the pie
creation game, which mirrors the concept of coopetition whereby the motives are to
increase the market share or, as referred to by Brandenburger (1996), the slice of
the pie. Following the end of coopetition, the winner is the organisation that has
benefitted most; they will be in control of dividing the pie. Coopetition may therefore
cause a loss of the market share (Lacomba, 2011). Coopetition is inherently different
to competition and cooperation as it recognises that competition and cooperation are
independent variables rather than extremes of strategy. Coopetition combines the
benefits of competitive and cooperative advantages (Yami, 2010). Studies into
coopetition have been industry-specific, predominantly knowledge-intensive sectors,
which can explain the vast differences in results (Ritala, 2012).
Another key motive for coopetition is the need to reduce dependence on external
resources and reduce the need for outsourcing. By cooperating and sharing
resources, new markets and competencies can open up. A dilemma of coopetition is
the level of transparency and what is shared between both parties. The difference
between the expectation and perception of transparency can cause ambiguity
regarding the role of coopetition between both parties. A key benefit for the market
with coopetition is improvements in standardised products and competitiveness,
which will increase the benefit to consumers (Dowling, 1996). In terms of the market
Page | 24
benefit for SMEs, coopetition will also improve SME access to markets dominated by
larger organisations but will also improve SME growth rate (Morris, 2007).
Coopetition between competitors has many key factors in its development, including
providing short cuts into investment and new opportunities. However, there are limits
to cooperation. If a firm is too transparent, it risks losing its share as well as any
unique resource. Coopetition acts as windows into firms to acquire new capabilities
from their competitors. Coopetition is a sign that firms are open to learning new
approaches. Historically, alliances were more intent on reducing costs. Coopetition
gains more from transferring competencies as well as ventures into unknown or
high-risk areas. It requires a limitation on transparency (Hamel, 1989). A balance is
needed between being too open and losing competencies, and being too closed and
unable to expand or learn. Another key part of transparency is selecting which
technologies to share with competitors.
A key factor of coopetition is the uncertainty for firms as to whether this strategy will
result in a sustainable benefit for them (Bouncken, 2015). It still plays a vital role for
SMEs due to an increased risk of conflict. Tidstrom (2009) defines how conflict
arises predominantly through relational issues, which can be caused by a loss of
trust. Levy (2003) explains that a key area of coopetition is shared information.
Selecting when to share information can cause an imbalance of benefit, which can
increase the competitive strength of the other organisation. According to Morris
(2007), trust plays a role through key boundaries being established. It is crucial to
sustaining long-term business relationships between organisations. Trust is defined
as mutual confidence between coopetiting organisations. An underlying element of
trust is the timing of information disclosure between firms, which helps to improve the
long-term coopetitive relationship and to increase the mutual benefit between firms.
Morris explains that the level of commitment and trust can be the main undermining
factor of coopetition. He concludes that coopetition strategy in SMEs has high levels
of benefits due to the small size of the organisations. It means that access to
Page | 25
information and resources is reduced, so coopetition not only offers greater access
but also a reduction in trust risk as the mutual benefit is increased with smaller
organisations (Morris, 2007). To understand the factors that contribute to the benefits
from coopetition, it is important to examine the role of trust. Trust is another theme of
coopetition and is a key factor depicting the success of coopetition (Chin, 2008).
Coordination and trust are key factors to optimise the benefit of coopetition (Dagnino,
2009). Coopetition is a high-risk strategy that often leads to failure due to one side
benefitting more than the other does, which then leads to a breakdown of the
relationship (Park and Russo, 1996). Coopetition becomes a learning race and can
lead to a failing alliance performance (Hamel, 1991).
The concept of trust and identifying the correct level of cooperation can be explained
by Kay (1993) using the prisoner’s dilemma. Figure 3 identifies the matrix showing
the possibilities. The idea behind this game theory is that if there is a specific plan,
both firms will benefit from following the strategy. Individually, they will both benefit
from not confessing. One of the key applications of this model is sharing information,
both internally and externally. Kay uses the example of joint ventures. The concept is
that if both firms were to have freedom of information, both would benefit from
increased knowledge, helping to provide a competitive advantage. However, if one
firm were to provide more information, they would limit their competitive advantage
while the other would gain it. The work of Kay (1993) identifies the link with an
economic rent-gaining strategy, such as Resource-Based View, with coopetition.
This is echoed by Gnyawali (2009) who explains that the concept of coopetition also
stems from RBV.
Page | 26
Figure 3, The prisoner’s Dilemma, Kay (1993)
Page | 27
market of coopetition, as coopetition will help drive improved market quality by
increasing competitiveness. Improved industry productivity is also expected to be an
important benefit. Trust is expected to be a main limiting factor of coopetition. The
risk of lacking trust is reduced in smaller firms through greater levels of mutual
benefit in improving access to markets and increasing profitability by improving
access to resources.
Proposition One:
Motives of coopetition
Proposition Two:
Page | 28
The benefits of coopetition for the market
In order to test the propositions, the study will interview four representative alpaca
breeders with the same open-ended questions to support or disprove the
propositions. The study will be representative of the industry by virtue of the
spectrum of breeders selected and the universal nature of the industry.
Page | 29
4. Results
All the data was collected through in-depth in-person and telephone interviews. A
thematic analysis was then applied. The sample of the subjects was varied. All the
subjects were respective owners of their organisations. The subjects ranged
between age 38 and 62. In terms of educational background, 75% of recipients had
degree level qualifications or higher. The sample was a 50% split between men and
women. The organisation size in terms of herd size varied from 56 alpacas to 925
and the average number of staff was five. The data showed that 75% of the sample
traded internationally within Europe. The data was analysed identifying themes that
related to the research questions.
The industry being researched is the UK alpaca industry. The activities of coopetition
in this industry include co-owning alpaca stud males, which 100% of the subjects do.
Co-owning enables breeders to maximise their quality output and reduce both
financial input and risk in order to improve their financial performance and overall
market conditions. Information-sharing is another important coopetitive activity in this
industry, and includes learning about new products, such as a whole-farm approach
and offering new products such as niche products and experiences. Resource
sharing such as fleece combining to improve market price is another industry-
specific coopetitive activity.
The thematic map below represents the results. They are coded in response to the
three key themes surrounding coopetition: Motives of Coopetition, Why firms engage
in coopetition, including benefits for them and the market; and the limiting factors of
coopetition.
Page | 30
Figure 4, Thematic map of Motives of Coopetition.
The data identified two primary motives of coopetition: one motive was
representative through all samples and the other represented 75% of samples. In
terms of importance, the subjects identified reducing financial risk as the highest-
ranking motive of coopetition in their coopetitive activities. Beginning with the
representation of financial risk from the data, it becomes clear that due to the
industry and the high cost of accessing rent-gaining resources, using coopetitive
strategies enables organisations to gain access through reduced capital application.
The data extract highlights a key motive for coopetition, which is the affordability of
accessing high-quality alpaca stud males. The extract highlights the theme of
reducing financial risk as well as improving the quality level of products.
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The second evident motive of coopetition was mutual benefit. Figure 6 identifies the
trend of mutual benefit, where both parties benefit from coopetition. Other themes
that link to this are also shown in Figure 5. This includes gaining mutual information
to their benefit, sharing the risk of co-owning as well financial risk as a primary
motive of coopetition.
In summary, all parties interviewed highlight financial risk as the primary motive for
coopetition. A shared financial risk is a mutual benefit for everyone.
Page | 32
Figure 7, Thematic map of why firms engage in coopetition.
Based on the data, the primary benefits of coopetition for the market include:
The second research area explores why firms engage in coopetition, and this is
linked to whether it benefits firms and the market. Figure 7 shows that the key
coopetitive benefits for the market include the development of new markets, and
Page | 33
improving and innovating the market standard. There is an interconnecting
relationship between why firms engage in coopetition and the benefits for the firm as
well as the market. Figure 8 shows evidence of coopetition providing the means to
access a new market. The example in this extract highlights the use of coopetitive
activities; in this case, co-owning alpaca studs in order to develop a new market to
differentiate their products. Here, the niche market of Suri alpaca fibre production is
highlighted. Figure 8 further supports the concept that co-owning helps the venture
of developing a new market. The extract coded identifies that combining resources is
done to improve access to other resources, such as improved financial performance
for the firm and improving the market overall, including developing a new market.
Market development in terms of innovation is a benefit for the organisation as well as
the market. Coopetition as shown in Figure 9 identifies that through shared
information the subject can create a new product range, which in turn helps to
promote the growth of the market. Figure 9 expands on how the market quality level
is promoted through coopetition. The extract shows evidence of coopetition activities,
including co-owning alpaca stud males. This has helped to improve the overall
quality of the market.
Page | 34
from our co-owning breeder.
Page | 35
but not in terms of quality.
Page | 36
means that if, out of one group, there is a
superstar, the co-owners benefit. What
has been a driver for me is that the risk
has to be evenly spread amongst the co-
owners, rather than disappointing.
The interviews highlight that the benefits of coopetition for the firm include:
Access to resources
o sharing resources
o economies of scale
Information-sharing
Improved financial performance
Improved quality
Shared risk
From the interviews, it is evident that coopetitive activities are beneficial as they
provide improved access to resources. Figure 12 shows that coopetitive activities
improve access for SMEs to rent-gaining resources. In this case, these resources
are high-quality stud males that help to improve financial performance for breeders
and the quality of fibre production in the market. The data also highlights the two
sub-themes of access to resources, including sharing resources and accessing
economies of scale. Figure 13 highlights how breeders involved in coopetitive
activities share resources such as fibre sorting and yarn production in order to
reduce the collective cost while increasing volume, which helps to improve the cost
per unit. This then links to the strategy of achieving economies of scale. This links to
Figure 11, which shows how sharing resources is helping to promote a new market.
Page | 37
them to leave. It has allowed us to
improve quality and allowed us to do
things we could not have done before.
Yes, it has improved access to more
resources to improved bloodlines and
studs.
The second key benefit of coopetition for firms shown by the interviews is learning
and sharing information between coopetitive parties. Figure 14 shows how open
information sharing enables organisations to increase their competitiveness. Figure
15 shows further evidence for coopetition benefitting firms through the information
they gain. Learning about the progeny produced by high-quality studs from the other
co-owning breeders helps to improve breeding quality and reduce the financial risk.
Page | 38
the other breeder so we can then learn
from them to apply it to grow our
business.
Improved financial performance is another benefit of coopetition for firms, and which
was evident from all the interviews. Figure 15 shows an interview extract highlighting
how coopetition increases financial performance, e.g. by reducing costs as
previously discussed.
One of the primary benefits of coopetition is the increase in production quality. This
includes improving the fibre quality of the overall market and the individual stock of
each breeder, which improves profitability and competitiveness. Respondents,
coupled with a reduced financial risk, noted improved quality as a primary benefit of
coopetitive activities. Figure 16 shows evidence of coopetition providing quality
improvements to the alpaca breeder
Page | 39
It has allowed us to improve quality and 5. Improved Quality
allowed us to do things we could not 10. Access to Resources
have done before. Yes, it has improved
access to more resources: to improved
bloodlines and studs.
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Figure 18, Thematic map of Limitations of Coopetition.
Figure 18 highlights the key findings of the research with regards to the limitations of
coopetition. The key factors include:
Trust
o Openness
o Risk of Disease
Geographical proximity
Size
Price
The research found that a primary limitation factor of coopetition was trust. There
was evidence of further sub-sections including openness between organisations as
well as an industry-specific risk of disease. Trust was seen by all subjects as a
limiting factor of coopetition. Figure 19 shows comments that illustrate trust as an
important factor. This is through an even distribution of benefit, as well as good
welfare for the stud male. In addition, Figure 20 shows that openness acts as a
limiting factor to beneficial information sharing between coopetitive firms. An
industry-specific issue that was evident was the risk of disease, which acts as a
limiting factor of not only coopetitive activities but also general business activities.
Page | 41
The location of co-owners is linked with the risk of diseases such as bovine TB.
Figure 21 shows that diseases also influence prices, which resulted in industry stock
dumping, thereby reducing the overall price.
Page | 42
an element of dumping, which has had a
greater influence on the price. Dumping
started with the whole debacle of TB in
alpacas; it has been going on for the last
5 to 6 years at least.
Geographical proximity was another theme evident from the interviews. Fifty percent
of respondents responded that co-owners would be selected by being reasonably
close to them. The other fifty percent wanted a spread of location that enabled
strategic positions, which meant that they were not directly competing in the same
locational markets. It also increased the range and impact of the stud males.
The impact of the size of other coopetitive organisations was split between the
respondents, with fifty percent highlighting that a large-sized organisation is
important when selecting a coopetitive partner. The interview data shows that price
was not a major factor in limiting the benefits of coopetition or in aiding price
stabilisation.
In summary, the overall evidence from the data highlights key themes that are
represented in the literature, with several themes that are industry-specific. Appendix
9.1 highlights the complete tables that are the sources of the extracts above. The
overall data highlights key themes.
Page | 43
5. Discussion
The first research question to address is: ‘What are the main motives of coopetition
for SMEs in the UK alpaca industry?’ The proposition put forward was that the
primary motive of coopetition is reducing the financial risk of conducting activities. In
this case, co-ownership of alpaca stud males. The results supported this proposition.
100% of the subjects identified financial reasons and risk as the key motive for
coopetition activities. The co-ownership of stud males reduces the overall financial
input and improves the overall quality. The other motive was that of mutual benefit.
Interestingly, this was not specifically identified in the results. However, by the nature
of the activities, it is implied that it is mutually beneficial so, knowingly or
unknowingly, it will be of mutual benefit. Figure 26 shows evidence of all four
subjects identifying reducing financial risk as a motive of coopetition. The results are
supportive of the proposition, with all subjects identifying the financial reasons of
reducing cost as a motive for co-owning, a coopetitive activity.
Figure 25, collective results table of the motives of coopetition sorted by data
subject.
Subject 1
Data Extract Coded For
Well I would say financial risk really, they 2. Financial Risk
are very expensive to buy, particularly
when imported, which a number of ours
were. An expensive business, importing
animals, and it helps you to aspire
higher.
Subject 2
Data Extract Coded For
The key reasons are to reduce our risk of 1. Financial Risk
owning alpacas both financial and 3. Information
breeding risk of the quality that they 5. Improved Quality
produce. Other than that, it is also 6. Sharing Risk
gaining the expertise and knowledge of
the other breeder so we can then learn
Page | 44
from them to apply it to grow our
business.
Subject 3
Data Extract Coded For
Dilution of capital requirement allows us 1. Financial Risk
to require the best genetics and gets rid 5. Improved Quality
of some of the expense. It allows for the
greater use of the studs across more
animals in a shorter timeframe to actually
prove their worth.
Subject 4
Data Extract Coded For
It helps me by getting a good stud male, 1. Financial Risk
covering as many females as possible 5. Improved Quality
and creating progeny. It also allows me 10. Access to Resources
to buy the best without having to spend
the capital to do that. Therefore, I still get
as much access as I need to the males,
but I don’t need to outlay all that capital.
Yes, it has improved the quality of the
herd.
The key literature contributions of motives of coopetition identify that sharing the
financial risk of coopetitive activities is a primary motive (Eriksson, 2011). This is
reflected in the results of the study. The industry-specific activity of co-owning alpaca
stud males to improve the alpaca fleece quality through coopetitive actions is a
motive for coopetition for SMEs in the UK alpaca industry. The answer provided in
the study is an acceptable addition to the current literature. A primary reason for
carrying out activities for SMEs is to improve financial performance. However, the
cost restrictions for SMEs will act as a limiting factor. This means that when
competitors combine coopetitive activities, it is for the mutual benefit for both firms as
it allows access to complementary resources. This is supported by the literature.
Page | 45
Coopetition is an important strategic tool for SMEs due to the need to develop and
obtain access to resources that may not be as readily available (Tidstrom, 2009).
The key area of the research concludes that the main motive of coopetition for SMEs
is to reduce financial risk. Both the cost of the initial investment as well as the
potential loss of the investment are spread between the coopetitors.
The second research question concerns why SMEs engage in coopetition. The
proposition was that coopetition was a strategy undertaken to pursue economic rent
by gaining resources that will enable them to improve their performance through
improved quality. The results of the study identified that improved financial
performance was a key reason for coopetition. Another finding was the
interconnected relationship between why SMEs engage in coopetition and the
benefits of coopetition for the firm and the market. The benefits are the reasons for
coopetition. Figure 27 shows a table of results on the theme of improved financial
performance, outlining the key reasons why firms choose coopetition. The table is
sorted by data subject. It is evident that all respondents identify improved financial
performance because of coopetitive activities. This is because access to rent-
gaining resources, such as improved quality products, will improve for SMEs, as they
may not be as readily available through competition. The other primary feature is the
improvement of the market condition. The literature supports this. The main reasons
of coopetition found in the literature include improving financial performance and
improving access to complementary resources that will improve financial
performance (Lechner, 2014). The primary way in which the research differs from the
literature is that the reasons of coopetition are linked to the benefits of coopetition.
Figure 26, collective results table of the motives of coopetition sorted by data
subject.
Subject 1
Data Extract Coded For
Yeah, I would say so. We learn from 3. Information
other people and what they are doing, we 9. Improved Financial Performance
have a lot of contact with the people we 10. Access to resources
co-own with, there is an open dialogue. 12. Openness
An example is that one of our co-owners
Page | 46
has an alpaca walking business; we do
the same and have been very successful
as a result. We process fibre together
which allows for economies of scale
which improves our prices and profits for
products such as selling yarn.
Subject 2
Data Extract Coded For
An excellent strategy because it has 5. Improved Quality
meant we have grown our business and 9. Improved Financial Performance
improved the quality of our produce as
well as improving our own efficiency.
Subject 3
Data Extract Coded For
With Suri, we are pulling in fibre from 1. Financial Risk
other competitors’ herds; they will be 7. Improves the Market
involved. It won’t be a democracy; it’s a 9. Improved Financial Performance
way that other owners can see
something happen. We sell all the
Huacaya fleece to UK Alpaca. This is
based on the idea that while we would
love to make more money out of the
fibre, we should be able to help create a
UK fibre industry. The big challenge is
getting them to pay enough. They are
making money but they are taking most
of the risk as they are developing the
marketplace.
Subject 4
Data Extract Coded For
We get a better price because it is higher 9. Improved Financial Performance
volume. The marketing gives us more
impact. Generally because we can afford
Page | 47
more advertising space.
The extension of the research question concerns the benefits of coopetition for the
firm as well as the market. As previously discussed, it was found in the study that a
relationship between why SMEs engage in coopetition is linked to the benefits of
coopetition for the SMEs. Arguably, the size of the firm suggests that the mutual
benefit of coopetition is strong due to coopetition being an important strategy for
SMEs. This is due to the need to develop and obtain access to resources they would
be unable to obtain without coopetition (Tidstrom, 2009). The proposition put forward
by the study identified that the key reasons of coopetition and the subsequent
benefits of coopetition primarily were that coopetition allows for an improvement of
product quality, which then acts as a benefit for the firm as well as the market. The
sharing of information was also seen to be an important benefit of coopetition as well
as an underlying reason for coopetition. It would allow for new strategies and product
ideas, which in turn would help to improve financial performance. This sharing of
information included sharing the results of the progeny of the co-owned stud males,
which would be valuable information to reduce the time to discover the quality level
of the stud male. Other information that is shared, other than breeding programmes,
includes learning about new product ideas and introducing new tourist experiences.
The next part of the proposition was that a key benefit for both the firm and the
market included strengthening the overall market, which is linked to the concept of
mutual benefit. It was proposed that the market was strengthened through increased
productivity and the improved, standardised quality of products found on the market.
The key benefits of coopetition were found to be improved product quality, which, in
this industry, is the quality level of the alpacas produced, predominantly shown by
the quality of the fibre of the progeny. All the respondents identified quality
improvement as a primary benefit of coopetition. Figure 28 is a table of results
highlighting that the key benefit of coopetition for the firm is improved quality. The
pattern found in the research was that the improved quality was a key benefit as well
as a driving reason for coopetition. The literature also highlights increased product
quality as a coopetitive benefit for the firm (Gurnani, (2007). The subjects of this
research also identified increased quality as a primary benefit of coopetition and an
underlying reason for coopetition.
Page | 48
Figure 27, collective results table of the motives of coopetition sorted by data
subject.
Subject 1
Data Extract Coded For
In the quality of the offspring that you 5. Improved Quality
achieve. If you then do not achieve this, 6. Sharing Risk
then you are sharing the risk and the loss
of the stud that is not achieving your
standards.
Subject 2
Data Extract Coded For
Co-owning helps us to improve the 5. Improved Quality
quality we have. It also will help the 7. Improves the Market
alpaca industry overall because it will
improve the access for other breeders to
improve the quality that they have in their
herd, so improve the overall fibre quality
in the UK.
Subject 3
Data Extract Coded For
It also allows the co-owners access to 1. Financial Risk
the best genetics. Hopefully by people 5. Improved Quality
doing that, we are, in some small part, 6. Sharing Risk
driving forward the quality of the national 7. Improves The Market
herd. It is a difficult industry to buy into
high-end genetics due to the huge value
of these males. It makes it affordable to
smaller breeders; it makes it manageable
for the fibre. We have split shares of the
co-owners across all the imports, which
means that if, out of one group, there is a
superstar, the co-owners benefit. What
Page | 49
has been a driver for me is that the risk
has to be evenly spread amongst the co-
owners, rather than disappointing.
Subject 4
Data Extract Coded For
It helps me by getting a good stud male, 1. Financial Risk
covering as many females as possible 5. Improved Quality
and creating progeny. It also allows me 10. Access to Resources
to buy the best without having to spend
the capital to do that. Therefore, I still get
as much access as I need to the males,
but I don’t need to outlay all that capital.
Yes, it has improved the quality of the
herd.
The next area of the proposition concerned information sharing as a key benefit of
coopetition as well as a reason of coopetition. The sharing of information between
coopetitors enables new strategies and product ideas, which in turn help to improve
financial performance. This information sharing included sharing the results of the
co-owned stud male progeny. This would be valuable information for reducing the
time needed to discover the quality-level of the stud male, because, as found in the
interviews, it takes around five to eight progeny to determine this. Other than
information related to breeding programmes, other shared information includes
learning about new product ideas and introducing new tourist experiences. In the
study, it was found that such mutual sharing of information acted as a primary benefit
as well as a reason for coopetition. However, the primary benefit was through the
improved quality achieved by coopetitive activities as discussed above. Figure 29 is
a results table showing how information sharing is a benefit of coopetition. The
results of the study supported the proposition. However, due to the unique industry
studied, information sharing was not as evident as suggested by the literature.
Coopetitive activities enable value creation through information being shared
between coopetitive firms (Park, 2014). In summary, information sharing does act as
Page | 50
a benefit of coopetition to an extent. Improving the quality level acts as the primary
driver and benefit of coopetition in this growing industry (Gurnani, (2007).
Figure 28, collective results table of the motives of coopetition sorted by data
subject.
Subject 1
Data Extract Coded For
How would you evaluate co-operating 1. Financial Risk
with a competitor’s activities overall? 2. Mutual Benefit
Very beneficial both in information with 3. Information
quality of offspring and financially with
spreading risk and improving quality.
Subject 2
Data Extract Coded For
The key reasons are to reduce our risk of 1. Financial Risk
owning alpacas both financial and 3. Information
breeding risk of the quality that they 5. Improved Quality
produce. Other than that, it is also 6. Sharing Risk
gaining the expertise and knowledge of
the other breeder so we can then learn
from them to apply it to grow our
business.
Subject 3
Data Extract Coded For
Gain more valuable information about the 3. Information
quality of the progeny?
Respondent: Yes.
Subject 4
Data Extract Coded For
Page | 51
I could say it is something that we would 2. Mutual Benefit
consider going forward. It is part of our 3. Information
business strategy, particularly for animals 7. Improves the Market
we are breeding and we see it as a way
forward for the fibre. We see it as an
essential part of the business. Because
joining together, currently we don’t have
enough fibre to satisfy demand; we need
to increase the volume to appeal to a
greater market place. We can only do
that by working together.
Market benefits were the next area proposed to be a primary benefit of coopetition,
as well as a reason for coopetition. The proposed market benefits were the improved
standardised quality and the creation of new markets. The findings of the research
support the proposition. The data also suggests that coopetition allowed the creation
of new markets. Not all respondents covered this. Figure 30 identifies the benefits for
the market, highlighting improvement of the overall market through increased quality
and standardisation as primary benefits. The literature supports this finding.
Coopetition means that the standardised quality produced can be increased through
collective improvements in quality, allowing the industry to grow as well as increasing
competitiveness (Bagshaw, 2001). The findings support both the literature and the
proposition. In summary, coopetition enables the benchmarking level of competitors
to improve, which adds value for both parties, as they can understand each other’s
position rather than simply learning new skills.
Figure 29, collective results table of the motives of coopetition sorted by data
subject.
Subject 1
Data Extract Coded For
It definitely helps the industry to move 7. Improves the Market
Page | 52
forward because we are bringing in more
genetically diverse animals. I think that a
criticism of importing from abroad is the
perception that they are better, as it
means you can overlook and exclude the
quality produced in this country.
Subject 2
Data Extract Coded For
Co-owning helps us to improve the 5. Improved Quality
quality we have. It also will help the 7. Improves the Market
alpaca industry overall because it will
improve the access for other breeders to
improve the quality that they have in their
herd, so improve the overall fibre quality
in the UK.
Subject 3
Data Extract Coded For
It also allows the co-owners access to 1. Financial Risk
the best genetics. Hopefully, by people 5. Improved Quality
doing that, we are, in some small part, 6. Sharing Risk
driving forward the quality of the national 7. Improves The Market
herd. It is a difficult industry to buy into
high-end genetics due to the huge value
of these males. It makes it affordable to
smaller breeders; it makes it manageable
for the fibre. We have split shares of the
co-owners across all the imports which
means that if, out of one group, there is a
superstar, the co-owners benefit. What
has been a driver for me is that the risk
has to be evenly spread amongst the co-
owners, rather than disappointing.
Subject 4
Page | 53
Data Extract Coded For
It shares genetics, it makes good 2. Mutual benefit
genetics available to more breeders, 5. Improved Quality
which improves the quality throughout 7. Improves the Market
the industry, which is a benefit for
everyone; it helps the industry to grow.
Other key findings supporting the propositions on the benefits of coopetition included
how coopetition enabled improved access to resources. This included sharing
resources such as fleece sorting, which enabled coopetitors to access improved
financial performance through economies of scale. The findings of the research
show that the subjects identified access to resources and sharing resources,
predominantly fleece sorting, as a key benefit of coopetition. Access to
complementary resources is a primary benefit of coopetition, which will enable
improved financial performance (Gnyawali 2009). The findings of the research
supported the literature as well as the proposition.
The other key finding, which links to motives, was that of sharing the risk of activities,
including the capital investment as well as the risk of failed innovation. The findings
of the research are supported by the literature. Coopetition enables the success risk
to be spread (Chen, 2013).
The final research question concerned the limitations of coopetition. The proposition
was that trust would be the underlying limitation factor of coopetition. The results
supported the proposition. However, there were unexpected findings that were not
supported by literature or by the propositions. Trust was found to be a limiting factor
by 75% of the respondents. Figure 31 highlights evidence supporting the proposition
that trust is vital to a mutually beneficial coopetitive relationship. It was found that the
openness between coopetitors, as well as the trust gained, needed to be even, as
well as shared general husbandry of the stud males. This openness was highlighted
as a primary factor. The industry-specific nature of alpaca husbandry was not
identified by the literature. However, in terms of trust acting as a limiting factor of
coopetition, this was present in the literature. Trust acts as a key factor to optimise
the benefit of coopetition (Dagnino, 2009). Trust and openness are heavily evident
Page | 54
within the literature, and are agreed to underpin a successful coopetition activity
(Chin, 2008). The findings are supported by the proposition as well as by the
literature.
Figure 30, collective results table of the motives of coopetition sorted by data
subject.
The results identified other factors that were not previously covered by the literature
or highlighted by the propositions. This included geographical proximity acting as a
limiting factor of coopetition, as well as the size of the other firm. In terms of industry-
specific limiting factors, this included the risk of disease, predominantly BTB.
Page | 55
Firstly, geographical proximity was identified by 50% of participants to be a limiting
factor of coopetition and an important factor in deciding whom to co-own with and
engage in coopetition with. This was then broken down further into two categories:
geographically close and strategic positions. The subjects identified that selecting a
strategic position enables an increased impact and spread of the coopetitive activity.
However, they also highlighted close proximity, which was then linked with logistics
and the threat of BTB. Regional threats of this disease are high-impact factors for the
UK alpaca industry in terms of price impacts as well as restrictions in conducting
business. It limits firm selection. If located in a high-risk area it is unlikely that a firm
is able to engage in coopetition. However, one factor linked to this is that coopetition
enables this risk to be reduced because an income continues to be made through
co-owned stud males by means of external hire fees if the farm is shut down. In
summary, this was not found to be supported by the literature due to the limitations
in literature with regard to non-information-based industries. The agricultural industry
identifies key factors to learn from in terms of applying coopetition as a successful
strategy.
To conclude, the research has identified key findings supported by the theory as well
as the literature. The propositions overall have been supported through findings.
Some findings that were industry-specific have not been present in the literature. In
terms of new contributions, it was found that other limitation factors, such as
geographical proximity, act as limiting factors of coopetition. Furthermore, the
benefits of coopetition are interconnected to why firms engage in coopetition, and
are a reason for coopetition.
Page | 56
6. Conclusions
In conclusion, of this study, the main motives of coopetition were to reduce the
financial risk of searching for activities to improve financial performance. This
supported the literature on coopetition, as well as the propositions. The second
finding was found in the industry of the study and was that coopetitive strategies
enabled firms to improve their quality level, by allowing them to access
complementary resources through sharing resources, such as fleece-sorting which
enables economies of scale. Coopetition enables SMEs to pursue rent-gaining
strategies with reduced financial risk as well as being able to improve the market.
The final research question relates to the limitations of coopetition. The main findings
were that trust was an overruling factor controlling coopetition. The other key finding,
including an industry-specific finding, was that geographical proximity could play a
role, either through being geographically close or through strategic positioning. In
conclusion, the study has been able to expand the knowledge of coopetition beyond
the dominant industries relating to coopetition by supporting its application as a
strategy by SMEs.
Page | 57
7. Implications/ Limitations/ Recommendations
The study has limitations in its application. Firstly, the key limitation is the limited
number of subjects interviewed. This is attributed to the industry size, which in its
current form is small and still growing. The small number of subjects was due to a
small number of subjects responding as well as the size of the industry. It is
recommended that for further study a wider sample is used, which may include
expanding to the more established alpaca markets in Australia and the United
States. The study has posed a wide range of questions. It would be advisable to
increase the number of questions to expand the breadth of the study and other
implications of coopetition. To improve this, it would be advisable to investigate
implications such as the limitation caused by geographical proximity. The
methodology used in this study has been effective in evaluating the research
questions. However, due to the small number of samples, it has not allowed for a
large amount of scope or variation. This may mean that further studies should
branch into a different market in order to understand the adaptability of the findings.
Page | 58
In summary, the study has been able to answer the research questions as well as
supporting and expanding the propositions. The limitation of the study is its size. A
future study to expand the subject respondents would allow for further investigation
and supporting evidence.
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9. Appendices
Page | 67
The attraction to sell into Europe is that if 7. Improves the Market
you buy from Europe, then your stock will
not be quarantined for six months.
Data Extract 5 Coded For
Probably challenging, for a number of 15. Price
reasons. Firstly, for price decline
because of a number of reasons; one
being the number of alpacas increased.
What you would expect from supply and
demand. That is overload by the fact of
security and diseases that affect the
alpaca industry. You can’t avoid the fact
that they catch TB. There are regional
variations on who is selling alpacas,
which has a huge impact on the price.
Data Extract 6 Coded For
Not so much for us to our region, but TB 15. Price
does have a major price influence on the
overall industry.
Data Extract 7 Coded For
In terms of fibre, I would say quite 4. New Market
promising. There is a lot of interest in 5. Improved Quality
developing the fibre and promoting fibre. 7. Improves the market
There has been a real resurgence in the
sale of natural fibres. Because of the
smaller scale of fibre compared to others,
alpaca fibre is a niche market rather than
a huge global market. I am hoping that
we will develop Suri alpaca fibre further,
which is a unique niche within alpaca
fibre, completely different from Huacaya.
Huacaya is more comparable with sheep
but not quality-wise.
Page | 68
Data Extract 8 Coded For
Because in our case, we are very 8. Innovation
different to a lot of other breeders. We
are not just selling alpacas, we have a
whole farm approach. Also because of
our training in alpacas and people we
occupy a different niche. So I do not view
my competitors as being other large
breeders. We are a medium breeder but
our approach is acting a lot like a smaller
breeder which I hope makes us an
interesting prospect. We have more
choice than a small breeder. We are
more suited for new buyers buying from
us because we can give them a high
degree of input.
Data Extract 9 Coded For
I think I would say more of the same, 7. Improves the Market
there is always going to be pressure on 15. Price
prices. I think a lot of that will depend on
general interest from Europe. I think a lot
of that will depend on disease. Europe
will be a huge part and will be very
encouraging for our industry.
Page | 69
Data Extract 11 Coded For
I am a great believer in educating and 6. Information
building knowledge and interest. You
can’t expect an industry to expand
without knowledge. Overall awareness of
that industry and people firstly keeping
alpacas and being able to do something
with the fibre.
Data Extract 12 Coded For
It can be a numbers game but this can 3. Information
be a negative. The more you invest, the 9. Improved Financial performance
more you need to be successful. We
have the whole farm approach. We have
a holiday let, we have alpaca walking
here. We are showing what the lifestyle
can be like. We didn’t set out to do that.
That is an attractive element of our
business. Visitors are happy with
experience which can generate into
purchasing.
Data Extract 13 Coded For
The most recent, co-owned are of the 3. Information
Suri part, so the majority of the offspring 4. New Market
are from co-owned. It is a long-term
process because the pregnancy lasts 11
months and they can’t breed for three
years so it is a long process. There is a
long time between buying and co-owning
and actually having breeding animals
from them, with the qualities and
characteristics that we want.
Data Extract 14 Coded For
Page | 70
Higher value and impact animals. You 5. Improved Quality
never buy an animal if you think it is a
waste of money. Particularly with non-
proven males. Even the best studs are
defined by their offspring. You only need
5-8 offspring to get an indication of the
quality level.
Page | 71
in an area that is geographically similar
to ours. That can limit us to this country.
Data Extract 19 Coded For
The larger breeder co-owns with others; 14. Size
from their point of view it massively
lowers their costs and they can purchase
more studs
Data Extract 20 Coded For
Sharing of knowledge, good relationship 3. Information
with breeders we are involved with. Also 7. Improves the Market
advice in strategy with things we have
experienced to better advise them. An
example is health issues; so, sharing
knowledge for the good of the industry.
Developing forums to improve
communication
Data Extract 21 Coded For
Yeah, I would say so. We learn from 3. Information
other people and what they are doing, we 9. Improved Financial Performance
have a lot of contact with the people we 10. Access to resources
co own with there is an open dialogue. 12. Openness
An example is that one of our co-owners
has an alpaca walking business; we do
the same and have been very successful
as a result. We process fibre together,
which allows for economies of scale,
which improves our prices and profits for
products such as selling yarn.
Data Extract 22 Coded For
Other than reducing risk and increasing 5. Improved Quality
quality available 6. Sharing Risk
Data Extract 23 Coded For
No, other than helping to market it as a 7. Improves the Market
Page | 72
different niche product. So, attractive in
its own right. Alpaca fibre has enough
qualities so it is just a case of education.
Cooperating means that you can spread
the word wider.
Data Extract 24 Coded For
Size doesn’t make a difference in 14. Size
selecting co-owning.
Page | 73
definitely increasing, with a larger focus
on natural fibre as well as a greater
interest in the UK in owning alpacas. So
it is definitely growing as an industry.
Data Extract 2 Coded For
I believe that the industry will be moving 5. Improved Quality
to increase the quality of the fibre
available in this market.
Page | 74
breeder to share the risk and financial 6. Sharing Risk
cost of purchasing to learn from them
and to improve the quality of our
products.
Page | 75
levels and reduce our costs and risk.
Data Extract 11 Coded For
We have been able to increase the 1. Financial Risk
profitability through reduced financial risk 3. Information
of co-owning as well as spread our reach 8. Innovation
through their contacts. Other than that, 9. Improved financial performance
we have been able to adapt our business
with new strategies that are being used
by our co-owning breeder, such as
producing other alpaca-based products
other than yarn, such as allergy-free
pillows.
Data Extract 12 Coded For
Well, learning new ways to utilise our 8. Innovation
unique products such as our yarn and
other products came as result of learning
from our co-owning breeder.
Page | 76
Yes, with the financial risk, but also the 1. Financial Risk
risk of failure if the stud does not 6. Sharing Risk
perform, you do not bear the full cost
including the time spent.
Data Extract 16 Coded For
Probably a larger breeder so we can 12. Openness
learn what they are doing which has
allowed them to expand and grow.
Data Extract 17 Coded For
Geographical location is definitely a 5. Improved Quality
factor, the closer they are to us the
easier it is for us to have a line of
communication. Also transportation of
stud males is easier.
Data Extract 18 Coded For
Yes, you need to be able to trust the 2. Mutual Benefit
other breeder won’t use the co-owned 11. Trust
stud for their own benefit by using it
beyond the agreed measures, which may
mean that it is an uneven proportion of
benefit between us.
Data Extract 19 Coded For
Other than our herd contracting any 11. Trust
disease, the only other risk is that of non-
proportionate benefit of the stud, with the
other party gaining more through better
results.
Data Extract 20 Coded For
Communication is key; we are very open 5. Improved Quality
with them and they are with us, so we 12. Openness
can examine the quality of the offspring
that the stud produces, which allows us
to assess the whole project.
Page | 77
Data Extract 21 Coded For
An excellent strategy because it has 5. Improved Quality
meant we have grown our business and 9. Improved Financial Performance
improved the quality of our produce as
well as improving our own efficiency.
Page | 78
ability to make lifestyle changes. The
overarching thing about the industry is
that it is a lifestyle choice to become
involved with alpacas. I think that is
where we are at; we are seeing
tremendous progress being made on the
fibre side of the business, and that is
where we are focusing our efforts in
breeding.
Data Extract 5 Coded For
I think they are economic but the 5. Improved Quality
economics have impacted the quality of
the breeding programmes, I think in the
main, probably on a percentage basis,
people have under-invested in their
genetics and have resorted to taking
short cuts, which have the potential to
impact negatively on the national herd as
a fibre producer of the highest level.
Data Extract 6 Coded For
To a large extent, there is a demand in 5. Improved Quality
coloured alpacas. The fibre that we want 8. Innovation
to develop is white; our breeding
programs have always been dedicated to
white. They are the best animals and that
is the way forward for the fibre industry.
However, on a commercial basis, we
have had to develop our coloured
breeding programmes. We have
responded to the market rather than our
competitors. Have I enjoyed doing that,
no I haven’t. We have made huge
investments in genetics in the last 10
Page | 79
years. In the last 2 or 3 years, the
genetics we have brought in we have
had to look at colour; ultimately I always
thought we would develop a fibre
industry. One of the major fibre buyers
cannot get enough white fibre to fulfil
their requirements of white fibre of the
right quality.
Data Extract 7 Coded For
People like us, the bigger units, we will 4. New Market
be looking at seed stock, end product
and meat. I think we will do all of those,
and I predict we will do this in the next 5
years
Data Extract 8 Coded For
I predicted that we would reach a point 4. New Market
that would be very difficult to get through.
That we have awareness for the fibre, an
awareness of the end product, but we
didn’t have enough of the raw product to
sustain a market. I think that is pretty
much where we have got to now. It has
been made complicated by something I
do not appreciate, which is the huge
variance in quality. I reckon if people
focus on meat at this point in time, it
would be almost a tacit statement that we
can’t make the fibre work. The meat
should be the final step, it shouldn’t be a
step
Data Extract 9 Coded For
We can’t get much value from them, in 4. New Market
the same way we can’t get value in their 5. Improved Quality
Page | 80
fibre, we can because of the bloodlines
we are using; the longevity of the fibre is
second to none. I am looking at those
from a commercial fibre herd. To make
them, commercial I need to do the end
product, which is sort of what we are
doing now.
Page | 81
A lot of breeders do not understand the 3. Information
end product or the fibre. There is still a
mind-set that it is alpaca and the quality
is up there with cashmere ergo alpaca is
going to produce great fibre: it doesn’t
work like that. A lot of breeders don’t get
that. We run events where we run
educational events and we are working
hard to make it educational. We have
spent a lot of money to educate other
breeders. I am a trainer for the breeder
society.
Data Extract 13 Coded For
Yes, the only way we can make this work 5. Improved Quality
is to make sure that we are producing the
best quality, be that end product or be
that raw fibre.
Data Extract 14 Coded For
When people want to breed with sub- 1. Financial Risk
quality males, all that does is reinforces 5. Improved Quality
into the national breeding programme
lesser quality genetics. In a lot of ways it
is sanctimonious to say that, because a
lot of things are driven by money and
available resources.
Data Extract 15 Coded For
I think the Suri is the only true niche in 4. New Market
the industry. So that is why we are
looking into it. Nobody is processing
commercial quantities of Suri fleece. That
is why we have been stockpiling and
hopefully by next spring we will have
some done.
Page | 82
Data Extract 16 Coded For
Dilution of capital requirement allows us 1. Financial Risk
to require the best genetics and gets rid 5. Improved Quality
of some of the expense. It allows for the
greater use of the studs across more
animals in a shorter timeframe to actually
prove their worth.
Data Extract 17 Coded For
Gain more valuable information about the 3. Information
quality of the progeny?
Respondent: Yes.
Page | 83
means that if out of one group there is a
superstar, the co-owners benefit. What
has been a driver for me is that the risk
has to be evenly spread amongst the co-
owners, rather than disappointing.
Data Extract 21 Coded For
If we identify a line of genetics that are 1. Financial Risk
particularly useful, that is the point when I 2. Mutual Benefit
assess if we can afford to do it on our 4. New Market
own. A point is that we are doing Suri 5. Improved Quality
males, out of a bloodline that I have been
doing for 10 years. I have finally hooked
something together; ourselves and one
other major breeder have put it together.
That is a direct spread of cost. I am
finding the market more difficult to co-
own animals. That may be because our
reach wasn’t as great as it was and other
people are doing it.
Data Extract 22 Coded For
I am also getting to the stage where I 5. Improved Quality
don’t want any more males with another 6. Sharing Risk
owner; the management is stressful. As
everybody is concentrating their breeding
season, it is more pressure on the males
and because we are breeding within the
country. We think that stand up with
them. We have males coming through
that we need to prove, that we think are
as good with what is out there abroad.
Data Extract 23 Coded For
I judge in America, so I get to see the 3. Information
development of other countries. I have 5. Improved Quality
Page | 84
seen what Australia and Europe have. I 6. Sharing Risk
think with what we have in our genetic
pool in our business, let alone the UK,
we can operate without having to go
abroad. In Huacaya, the Suri is a
narrower gene base. We won’t import
any more, even Suris. My personal wish
is I expect that the co-owners will be
using the males from the bloodlines of
the original co-owned in their
programmes, therefore the management
will become simple.
Data Extract 24 Coded For
The more dynamic of them are selling on 10. Access to Resources
the co-owned ones. It has enabled them
to extract values from males that we
would normally castrate. By selling on a
half share, we are almost creating a myth
that the animal is better than it is.
Data Extract 25 Coded For
We have ideas; they haven’t worked. 8. Innovation
Either because of lack of time or lack of 10. Access to Resources
resources, and, in part, because the
industry doesn’t seem receptive to the
particular. It is very cautious to new
ideas.
Data Extract 26 Coded For
With Suri we are pulling in fibre from 1. Financial Risk
other competitors’ herds; they will be 7. Improves the Market
involved. It won’t be a democracy; it’s a 9. Improved Financial Performance
way that other owners can see
something happen. We sell all the
Huacaya fleece to UK Alpaca. This is
Page | 85
based on the idea that, while we would
love to make more money out of the
fibre, we should be able to help create a
UK fibre industry. The big challenge is
getting them to pay enough. They are
making money but they are taking most
of the risk as they are developing the
marketplace.
Data Extract 27 Coded For
In the main we want a reasonable 11. Trust
spread. It gives a reasonable chance to 13. Geographical Proximity
get the males to work and earn stud fees.
The first marker is whether or not we
think the people are going to be easy to
work with or relatively to work with, as it
does create pressure. You have to have
trust and mutual trust.
Data Extract 28 Coded For
In terms of who we choose, trust has to 1. Financial Risk
be first and foremost. The alpaca 11. Trust
industry isn’t any different to any other
industry. Whether they are small or larger
breeders, there is significant amount of
money involved.
Data Extract 29 Coded For
You have to be in a position to trust 11. Trust
people to represent what you are doing
as a programme honestly. Because of
the nature of the relationship we have,
because of the nature you have to be
straight with outside services.
Data Extract 30 Coded For
The alpaca industry is a small pond. The 7. Improves the Market
Page | 86
UK and European-wise is small. There 11. Trust
are predators; they used to be small, now
they are large sharks. You need to be
cautious of that. We do not want to be
involved with people whose motives we
cannot respect.
Data Extract 31 Coded For
There is always a risk of 6. Sharing the Risk
mismanagement of animals when they 11. Trust
are off farm. This could be as simple as
over-use rendering them infertile for a
short or long time. That is the largest risk;
it could mean the death of the animals
because they are not insured. The other
risk is disease. That is why we are
selective in choosing with biosecurity.
Data Extract 32 Coded For
There is not a risk of sharing information 3. Information
because we want the world to know what 5. Improved Quality
we are doing. That links back with getting
these animals used as much as possible.
To actually find out what they are doing
in different circumstances. What we are
proud of is that our client base enjoys a
greater success in the show ring than
anybody else. We rate very highly
because a lot of our business is repeat
business.
Data Extract 33 Coded For
We do not take animals from TB 6. Sharing Risk
hotspots. The perception of TB is a
problem fire and is far worse than it is
due to mismanagement. Our new setup
Page | 87
will offer more to more clients with a
higher level of buyer security.
Page | 88
appeal to a better market with a higher
volume. Awareness is a key reason; the
awareness that the fibre exists in this
country, as before, most of the fibre has
been imported from Peru.
Data Extract 4 Coded For
Growing in live animals, as we have the 5. Improved Quality
land and the farms to do that. In parallel 7. Improves the Market
to that and the fibre production increases
with that two-fold. The quality levels are
increasing due to the growing herd and
the collective breeding going on.
Data Extract 5 Coded For
They need to improve on their marketing 3. Information
capacity, education on the value of the 5. Improved Quality
alpaca fibre and the animals themselves.
In the areas of genetic mapping and
estimated breeding value, in order to
breed better animals.
Data Extract 6 Coded For
There are two reasons, one: affordability; 1. Financial Risk
also being the only option to gain access 4. New Market
to these males, and three: we co-own
some on our farm that we share a farm
with in Holland; it gives us access to
another market. We have been sharing a
farm in Holland for 3 years.
Data Extract 7 Coded For
The other farm breeds the male, we 1. Financial Risk
approach them; they won’t give the
option to buy outright, so it gives us
access.
Data Extract 8 Coded For
Page | 89
We were driven by finance. 1. Financial Risk
Page | 90
Data Extract 14 Coded For
We get a better price because it is higher 9. Improved Financial Performance
volume. The marketing gives us more
impact. Generally because we can afford
more advertising space.
Data Extract 15 Coded For
Only sometimes the travelling distance 10. Access to Resources
for the animals is challenging, and 12. Openness
general access to the males.
Data Extract 16 Coded For
Yes, it has; so there have been different 4. New market
events that we have run, which has 8. Innovation
appealed to a different marketplace.
Also, different ways of marketing in
general, with different ideas.
Data Extract 17 Coded For
Yes, it has; prices have been more 15. Price
regulated and there is more of a level
playing field.
Data Extract 18 Coded For
Yes, it has; generally from farms being 2. Mutual Benefit
shut down and having movement 6. Sharing Risk
restrictions, you can call your other co-
owned males to earn you an income as
they are off-site. Also, split risk in case
the male doesn’t perform, but that
doesn’t happen often. Your outlay is less
so your risk is reduced of losing that
money.
Data Extract 19 Coded For
Oh yes, absolutely. They need to have a 14. Size
size that warrants spending the money
on a co-owned male; they need to be a
Page | 91
large size.
Data Extract 20 Coded For
If the male is shared and used for outside 13. Geographical Proximity
stud servicing, we look for it being
positioned around the country in strategic
areas to yield a greater market. What we
wouldn’t do is have 3 males in west
Dorset as we are all trying to access the
same market.
Page | 92
9.2 Interview Transcripts
Subject one
Interviewer: When was the company established, and which is its legal form?
Respondent: I guess the company was established when we bought the alpacas or
sometime soon afterwards. We didn’t intend to be commercial, just alpaca owners.
We bought our first alpacas back in 2000. And probably a couple of years after we
formed Spring Farm’s partnership which is where we buy and sell our alpacas
through.
Interviewer: How many employees do you have at the moment? (permanent and
non-permanent)
Page | 93
Interviewer: So is it predominantly in Europe?
Respondent: Yes, the reason being is that they don’t need to be quarantined.
Alpacas that come from either the States or Australia are quarantined for six months.
The attraction to sell into Europe is that if you buy from Europe then your stock will
not be quarantined for six months.
Interviewer: From which market does the major part of your turnover come from
(local, national, international)?
Page | 94
Fish biology. That led me to non-animal work in finance. After fifteen years in
finance, we bought the farm.
Interviewer: Age?
Respondent: I was born in 1961. (54)
Interviewer: Sex?
Female
Background on Industry
Interviewer: How would you describe the current state of the UK Alpaca industry?
Respondent: Probably challenging, for a number of reasons. Firstly, for price decline
because of a number of reasons; one being the number of alpacas increased. What
you would expect from supply and demand. That is overload by the fact of security
and disease that affect the alpaca industry. You can’t avoid the fact that they catch
TB. There are regional variations on who is selling alpacas, which has a huge impact
on the price.
Interviewer: With the TB risk, would you say that that is a major impact to price
fluctuations?
Respondent: Not so much for us to our region, but TB does have a major price
influence on the overall industry.
Interviewer: How would you describe the major changes to the UK Alpaca industry in
the last 5 years?
Respondent: In terms of fibre, I would say quite promising. There is a lot of interest
in developing the fibre and promoting fibre. There has been a real resurgence in the
sale of natural fibres. Because of the smaller scale of fibre compared to others,
alpaca fibre is a niche market rather than a huge global market. I am hoping that we
will develop Suri alpaca fibre further, which is a unique niche within alpaca fibre
completely, different from Huacaya. Huacaya is more comparable with sheep but not
quality-wise.
Page | 95
Interviewer: How much do you feel pressured by your competitors in the industry?
(Try to define the level of competitive pressure, low-mild, medium, intense, harsh)?
Why? Give evidence for your answer
Interviewer: Why?
Respondent: Because, in our case, we are very different to a lot of other breeders.
We are not just selling alpacas; we have a whole farm approach. Also, because of
our training in alpacas and people, we occupy a different niche. So I do not view my
competitors as being other large breeders. We are a medium breeder but our
approach is acting a lot like a smaller breeder. Which I hope makes us an interesting
prospect. We have more choice than a small breeder. We are more suited for new
buyers buying from us because we can give them a high degree of input.
Interviewer: Where do you see the UK alpaca industry progressing in the future?
Respondent: I think I would say more of the same; there is always going to be
pressure on prices. I think a lot of that will depend on general interest from Europe. I
think a lot of that will depend on disease. Europe will l be a huge part and will be very
encouraging for our industry.
Interviewer: How would you see the alpaca industry cracking in Europe?
Respondent: More interest in Europe and to some extent educating in alpaca fibre.
This would be a great starting point. More shows abroad and more people interested
in going to those shows. General awareness about alpacas, particularly for large or
small farms.
Page | 96
should generate interest. Ourselves, we are trying to provide them with good
experiences which makes them want to continue and purchase alpacas.
Interviewer: On which fronts do you see your competitors progressing at a faster rate
than yourselves?
Respondent: It can be a numbers game but this can be a negative. The more you
invest the more you need to be successful. We have the whole farm approach. We
have a holiday let, we have alpaca walking here. We are showing what the lifestyle
can be like. We didn’t set out to do that. That is an attractive element of our
business. Visitors are happy with experience, which can generate into purchasing.
Interviewer: How many alpaca studs do you own wholly, how many do you co-own?
Respondent: 8 with 3 breeders. 5 are with one breeder. The other two are with one
and the one with one breeder.
The other breeder we co-own 5 with; a large proportion are from those studs. It
complicated, because we bought 6 with one breeder and we wholly own one of
them. We use that one more ourselves. The most recent, co-owned are of the Suri
part, so the majority of the offspring are from co-owned. It is a long-term process
because the pregnancy lasts 12 months and they can’t breed for three years, so it is
a long process. There is a long time between buying and co-owning, and actually
having breeding animals from them, with the qualities and characteristics that we
want.
Page | 97
Interviewer: What are the key reasons for co-owning alpaca stud males?
Respondent: Well, I would say financial risk really; they are very expensive to buy,
particularly when imported, which a number of ours were. An expensive business,
importing animals, and it helps you to aspire higher. Higher value and impact
animals. You never buy an animal if you think it is a waste of money, particularly with
non-proven males. Even the best studs are defined by their offspring. You only need
5-8 offspring to get an indication of the quality level.
Respondent: In the quality of the offspring that you achieve. If you then do not
achieve this, than you are sharing the risk and the loss of the stud that is not
achieving your standards.
Interviewer: How does co-owning help you and the alpaca industry?
Respondent: It definitely helps the industry to move forward because we are bringing
in more genetically diverse animals. I think that a criticism of importing from abroad
is the perception that they are better, as it means you can overlook and exclude the
quality produced in this country.
Interviewer: How do you decide when to and not to co-own a stud male?
Respondent: The knowledge of the breeder and knowledge of the alpaca. That can
involve the shape and colour. As well as the specialisation of the other breeder in
producing alpacas of that colour. Mostly it is fibre quality and progeny. Progeny-
testing is a great way of testing the alpaca quality, as well as the breeder.
Respondent: the most recent import we have been involved in is 3 years, including a
year in quarantine. Oldest co-own is 8 years.
Page | 98
Respondent: The larger breeder co-owns with others; from their point of view it
massively lowers their costs and they can purchase more studs.
Respondent: Both; we have contracts with some. The main breeder we are involved
with we have a contract with is because there is a formula in breeding. Some, there
are no written contracts, so informal. Other than first refusal if you wanted to sell it
on.
Interviewer: Is your company in any way engaged in a co-opetition activity, i.e. are
there any other areas where you cooperate with competitors?
Respondent: Reduced financial risk and improved quality of fibre from offspring as
well as gaining knowledge.
Interviewer: Which were the main challenges that you have faced while trying to co-
operate with a competitor?
Respondent: I suppose, a challenge is getting use of the stud when other breeders
are involved. Because what we will not do is allow an animal enter our farm when it
has come from another one straight away because of the problems with parasites.
Interviewer: Have you co-operated with a competitor in order to be led to new ways
of producing or doing business or to develop new products (services) (innovation)?
Respondent: Yeah, I would say so. We learn from other people and what they are
doing, we have a lot of contact with the people we co-own with, there is an open
dialogue. An example is that one of our co-owners has an alpaca walking business;
we do the same and have been very successful as a result. We process fibre
Page | 99
together which allows for economies of scale which improves our prices and profits
for products such as selling yarn.
Respondent: Other than reducing risk and increasing quality available, no.
Interviewer: Have you co-operated with a competitor in order to secure your product
prices from declining?
Interviewer: Have you co-operated with a competitor to face threats deriving from the
evolution of another industry (e.g. wool)
Interviewer: Have you co-operated with a competitor in order to split risk for an
operation?
Respondent: In terms of reducing the financial risk wholly. You can also judge the
success of the male by the offspring it has produced for the other breeders. It helps
you gain valuable information therefore spreading the risk. That is if we are open.
Interviewer: Would you prefer to co-operate with a competitor who is smaller/ larger
than you?
Interviewer: Would you prefer to co-operate with a competitors who are closer to you
(geographically/ culturally) or with more distant ones?
Coopetition Risks
Page | 100
Respondent: It depends on your personal relationship with the co-owners. I would
say, overall, yes. One of our breeders is very closed with information other than what
offspring they have had as a result of co-owned studs.
Interviewer: What kind of risks has your company faced while co-operating with a
competitor?
Respondent: Depends where they are situated. Disease is a factor. Other than that
there are limited risks involved.
Interviewer: How do you manage these risks? What kind of measures do you take?
Respondent: Security, such as not having any animals coming into the farm from
others.
Subject two
Interviewer: When was the company established, and which is its legal form?
Respondent: We bought our first animals in 2005 and shortly after that began our
business. It is a limited company.
Interviewer: How many employees do you have at the moment? (permanent and
non-permanent)
Page | 101
Respondent: We have two full time employees and three part time employees,
including staff who deal with the farm management element such as hay-making and
field management. So five in total.
Interviewer: From which market does the major part of your turnover come from
(local, national, international)?
Respondent: Nationally, mainly from local and further reaches in the UK.
Page | 102
Respondent: My educational background is in languages at degree level.
Interviewer: Age?
57
Interviewer: Sex?
Female
Background on Industry
Interviewer: How would you describe the current state of the UK Alpaca industry?
Interviewer: How would you describe the major changes to UK alpaca industry in the
last 5 years?
How much do you feel pressured by your competitors in the industry? (Try to define
the level of competitive pressure, low-mild, medium, intense, harsh)? Why? Give
evidence for your answer
Interviewer: Where do you see the UK alpaca industry progressing in the future?
Respondent: I believe that the industry will be moving to increase the quality of the
fibre available in this market.
Page | 103
Respondent: Improving the available knowledge about alpacas in the UK in order to
increase public awareness and increasing sales here.
Interviewer: How many alpaca studs do you own wholly, how many co-own?
Interviewer: What are the key reasons for co-owning alpaca stud males?
Respondent: The key reasons are to reduce our risk of owning alpacas both financial
and breeding risk of the quality that they produce. Other than that, it is also gaining
the expertise and knowledge of the other breeder so we can then learn from them to
apply it to grow our business.
Interviewer: How does co-owning help you and the alpaca industry?
Respondent: Co-owning helps us to improve the quality we have. It will also help the
alpaca industry overall because it will improve the access for other breeders to
improve the quality that they have in their herd, so improve the overall fibre quality in
the UK.
Interviewer: How do you decide when to and not to co-own a stud male?
Page | 104
Respondent: Knowing about what the breeder has previously done as well as
information about the stud male in question; if they are proven or not.
Respondent: Yes, they are a larger breeder and co-own with other smaller breeders.
Interviewer: Is your company in any way engaged in a co-opetition activity, i.e. are
there any other areas where you cooperate with competitors?
Respondent: I would say the sharing of information and knowledge of our business
with the co-owning breeder, in order to keep an open dialogue and provide new
ideas and strategy to drive our businesses forward, such as sharing fibre sorting and
yarn production to increase our stock levels and reduce our costs and risk.
Page | 105
Interviewer: Which were the main challenges that you have faced while trying to co-
operate with a competitor?
Interviewer: Have you co-operated with a competitor in order to be led to new ways
of producing or doing business or to develop new products (services) (innovation)?
Respondent: Well, learning new ways to utilise our unique products such as our yarn
and other products came as result of learning from our co-owning breeder.
Respondent: Due to our relatively small size, financial risk and resources were a
factor. By co-owning, we massively reduce our risk as well as financial resources
needed. It also means that we have greater knowledge of other resources which are
of benefit.
Interviewer: Have you co-operated with a competitor in order to secure your product
prices from declining?
Respondent: Unfortunately, the price decline is apparent even with co-owning and
improving our quality because of other factors such as disease scares and increased
number of breeders.
Interviewer: Have you co-operated with a competitor in order to split risk for an
operation?
Respondent: Yes with the financial risk, but also the risk of failure if the stud does not
perform, you do not bear the full cost, including the time spent.
Interviewer: Would you prefer to co-operate with a competitor who is smaller/ larger
than you?
Page | 106
Respondent: Probably a larger breeder so we can learn what they are doing which
has allowed them to expand and grow.
Interviewer: Would you prefer to co-operate with competitors who are closer to you
(geographically/ culturally) or with more distant ones?
Respondent: Geographical location is definitely a factor; the closer they are to us the
easier it is for us to have a line of communication. Also transportation of stud males
makes it easier.
Coopetiton Risks
Respondent: Yes, you need to be able to trust the other breeder won’t use the co-
owned stud for their own benefit by using it beyond the agreed measures, which may
mean that it is an uneven proportion of benefit between us.
Interviewer: What kind of risks has your company faced while co-operating with a
competitor?
Respondent: Other than our herd contracting any disease, the only other risk is that
of non-proportionate benefit of the stud, with the other party gaining more through
better results.
Interviewer: How do you manage these risks? What kind of measures do you take?
Respondent: Communication is key; we are very open with them and they are with
us, so we can examine the quality of the offspring that the stud produces, which
allows us to assess the whole project.
Subject Three
Page | 107
Interviewed 16/06/2015 : interview duration 55 minutes
Interviewer: When was the company established, and which is its legal form?
Interviewer: How many employees do you have at the moment? (Permanent and
non-permanent)
Respondent: five permanent and various part-time staff. We have vet students; we
employ some of them, temporary cover.
Respondent: Holland, Belgium, France; we are working on both Italy and Spain. The
market for most British breeders has been severely detained by the bovine TB.
Interviewer: Would you say that TB is an impacting factor of price for alpacas?
Page | 108
Respondent: UK price affected by bovine TB. The whole thing has split the country,
with perceived high-risk and low-risk areas. It has meant that people have…smaller
breeders have decided to reduce numbers by any cost. So there has been an
element of dumping, which has had a greater influence on the price. Dumping
started with the whole debacle of TB in alpacas. It has been going on for the last 5 to
6 years at least.
Interviewer: From which market does the major part of your turnover come from
(local, national, international)?
Interviewer: Age?
Respondent: 62
Interviewer: Sex?
Page | 109
Respondent: Male
Background on Industry
Interviewer: How would you describe the current state of the UK Alpaca industry?
Interviewer: How would you describe the major changes to UK alpaca industry in the
last 5 years?
Respondent: I think they are economic but the economics have impacted the quality
of the breeding programmes. I think in the main, probably on a percentage basis
people have under-invested in their genetics and have sort to take short cuts which
have the potential to impact negatively on the national herd as a fibre producer of the
highest level.
How much do you feel pressured by your competitors in the industry? (Try to define
the level of competitive pressure, low-mild, and medium, intense, harsh)? Why? Give
evidence for your answer
Page | 110
Respondent: I would say in terms of market, low to medium because we tend not to
base our decisions on what other people are doing, we are very focused on what we
are doing and as long as we can pay the bills we won’t make significant changes.
Respondent: To a large extent, there is a demand in coloured alpacas. The fibre that
we want to develop is white; our breeding programs have always been dedicated by
white. They are the best animals and that is the way forward for the fibre industry.
However, on a commercial basis we have had to develop our coloured breeding
programmes; we have responded to the market rather than our competitors. Have I
enjoyed doing that? No, I haven’t. We have made huge investments in genetics in
the last 10 years. In the last 2 or 3 years the genetics we have brought in we have
had to look at colour; ultimately I always thought we would develop a fibre industry.
One of the major fibre buyers cannot get enough white fibre to fulfil their
requirements of white fibre of the right quality.
Interviewer: Where do you see the UK alpaca industry progressing in the future?
Respondent: The split will become more defined. I think we will see some of the
lesser-quality herds relying on the cottage industry to justify their fibre; I think that we
will see some of the older generations retire and there won’t necessarily be
replacements for them. The market at the moment the available information
suggests that this isn’t happening in a great way. People like us the bigger units, we
will be looking at seed stock, end product and meat. I think we will do all of those,
and I predict we will do this in the next 5 years
Respondent: I think it is being looked at. It sits badly; I don’t want to do it. I’ve farmed
my whole life, my history is livestock farming. It’s being looked at and some people
are doing it at a very modest scale. The problem is, to me it is contradictory to the
development of the industry in a sustainable way. We have set it up, in the early
days when the first imports came in in 1996; it was very much about something
pretty and new. Enthusiasm about a dream to establish something. Where we are at
now is that we have a situation; I predicted it when I came in 1998. I worked for an
Australian company, I was European manager. I predicted that we would reach a
Page | 111
point that would be very difficult to get through. That we have awareness for the
fibre, an awareness of the end product, but we didn’t have enough of the raw product
to sustain a market. I think that is pretty much where we have got to now. It has been
made complicated by something I do not appreciate is the huge variance in quality. I
reckon if people focus on meat at this point in time, it would be almost a tacit
statement that we can’t make the fibre work. The meat should be the final step, it
shouldn’t be a step if we have a group of males in another field and we are
scratching our heads and wondering what we are going to do with them. The easy
option is to sell and make them into sausages. We can’t get much value from them,
in the same way we can’t get value in their fibre, we can because of the bloodlines
we are using the longevity of the fibre is second to none. I am looking at those from a
commercial fibre herd, to make them commercial I need to do the end product, which
is sort of what we are doing now
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Interviewer: So you are trying to increase the quality of the market overall?
Respondent: Yes; the only way we can make this work is to make sure that we are
producing the best quality, be that end product or be that raw fibre. We are not
getting that message across; there is a thing we call barn blindness. A lot of people
can’t get past that their animals are beautiful. When people want to breed with sub-
quality males, all that does is reinforces into the national breeding programme lesser
quality genetics. In a lot of ways it is sanctimonious to say that because a lot of
things are driven by money and available resources, but you can’t get away from it;
there is a danger that the hobby end, the tail starts to wag the dog; I think it goes
back to the tipping point, there is a danger for that happening so we need to be
aware of that.
Respondent: We co-own 16 and have just signed a new contract to co-own another
two, so 18.
Interviewer: In terms of those co-owned studs, how many breeders are you co-
owning with?
Respondent: 2006, we still co-own with the first breeder but the stud isn’t operative.
Respondent: 26 non-co-owned.
Interviewer: How many co-owned studs are Suri and do you see Suri’s being a new
market in terms of diversifying?
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Respondent: Only four Suris, I think the Suri is the only true niche in the industry. So
that is why we are looking into it. Nobody is processing commercial quantities of suri
fleece; that is why we have been stockpiling and hopefully by next spring we will
have some done.
Interviewer: What are the key reasons for co-owning alpaca stud males?
Interviewer: So you can gain more valuable information about the quality of the
progeny?
Respondent: Yes.
Respondent: No, because we would sell on the share due to our reputation. Most of
the co-owned males are imports. They are specially sourced genetics mostly from
the US and Australia.
Interviewer: How does co-owning help you and the alpaca industry?
Respondent: It also allows the co-owners access to the best genetics. Hopefully, by
people doing that, we are, in some small part, driving forward the quality of the
national herd. It is a difficult industry to buy into high-end genetics due to the huge
value of these males. It makes it affordable to smaller breeders; it makes it
manageable for the fibre. We have split shares of the co-owners across all the
imports which means that if, out of one group, there is a superstar, the co-owners
benefit. What has been a driver for me is that the risk has to be evenly spread
amongst the co-owners, rather than disappointing.
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Interviewer: How do you decide when to and not to co-own a stud male?
Respondent: Trade secret. If we identify a line of genetics that are particularly useful,
that is the point when I assess if we can afford to do it on our own, a point is that we
are doing Suri males, out of a bloodline that I have been doing for 10 years. I have
finally hooked something together. Ourselves and one other major breeder have put
it together. That is a direct spread of cost. I am finding the market more difficult to co-
own animals. That may be because our reach wasn’t as great as it was and other
people are doing it. I am also getting to the stage where I don’t want any more males
with another owner; the management is stressful. As everybody is concentrating
their breeding season, it is more pressure on the males and because we are
breeding within the country. We think that stands up with them. We have males
coming through that we need to prove that we think are as good with what is out
there abroad. I judge in America, so I get to see the development of other countries. I
have seen what Australia and Europe have. I think with what we have in our genetic
pool in our business let alone the UK we can operate without having to go abroad. In
Huacaya, the Suri is a narrower gene base. We won’t import any more, even Suris.
My personal wish is I expect that the co-owners will be using the males from the
bloodlines of the original co-owned in their programmes; therefore the management
will become simple.
Respondent:
Respondent: The more dynamic of them are selling on the co-owned ones. It has
enabled them to extract values from males that we would normally castrate. By
selling on a half share, we are almost creating a myth that the animal is better than it
is.
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Interviewer: Is your company in any way engaged in a co-opetition activity, i.e. are
there any other areas where you cooperate with competitors?
Interviewer: Which were the main challenges that you have faced while trying to co-
operate with a competitor?
Interviewer: Have you co-operated with a competitor in order to be led to new ways
of producing or doing business or to develop new products (services) (innovation)?
Respondent: We have ideas, they haven’t worked. Either because of lack of time or
lack of resource, and in part, because the industry doesn’t seem receptive to the
particular. It is very cautious to new ideas.
Respondent: With Suri, we are pulling in fibre from other competitors’ herds; they will
be involved. It won’t be a democracy; it’s a way that other owners can see something
happen. We sell all the Huacaya fleece to UK Alpaca. This is based on the idea that
while we would love to make more money out of the fibre, we should be able to help
create a UK fibre industry. The big challenge is getting them to pay enough. They
are making money but they are taking most of the risk as they are developing the
marketplace.
Interviewer: Would you prefer to co-operate with a competitors who is smaller/ larger
than you?
Interviewer: Would you prefer to co-operate with a competitors who are closer to you
(geographically/ culturally) or with more distant ones?
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think the people are going to be easy to work with or relatively to work with as it does
create pressure. You have to have trust and mutual trust.
Coopetition Risks
Respondent: In terms of who we choose, trust has to be first and foremost. The
alpaca industry isn’t any different to any other industry; whether they are small or
larger breeders, there is a significant amount of money involved. The other side is
that it is a pedigree industry, as you have all the breeding societies. Like it or not,
you have all the challenging as you would have with other pedigree building. A lot of
our breeding is geared towards the showing. You have to be in a position to trust
people to represent what you are doing as a programme honestly. Because of the
nature of the relationship we have, because of the nature, you have to be straight
with outside services when those services were given. The alpaca industry is a small
pond. The UK and European-wise is small. There are predators; they used to be
small now they are large sharks. You need to be cautious of that. We do not want to
be involved with people whose motives we cannot respect.
Interviewer: What kind of risks has your company faced while co-operating with a
competitor?
Respondent: there is always a risk of mismanagement of animals when they are off
farm. This could be as simple as over-use rendering them infertile for short or long
time. That is the largest risk; it could mean the death of the animals because they
are not insured. The other risk is disease; that is why we are selective in choosing
with biosecurity. There is not a risk of sharing information because we want the world
to know what we are doing. That links back with getting these animals used as much
as possible to actually find out what they are doing in different circumstances. What
we are proud of is that our client base enjoys a greater success in the show ring than
anybody else. We rate very highly because a lot of our business is repeat business.
Interviewer: How do you manage these risks? What kind of measures do you take?
Respondent: We don’t mix client animals with our main herd. We tend now not to
take animals back in from farms that clients have not been long standing. We do not
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take animals from TB hotspots. The perception of TB is a problem fire and is far
worse than it is due to mismanagement. Our new set up will offer more to more
clients with a higher level of buyer security.
Respondent: On the whole there are stresses, but we have had nothing that has
stopped it. We have had one co-owner who wanted to stop because they over-
stretched themselves. We got them out of it, pain-free. That is ultimately because if
an individual is causing a stress we will persuade them to leave. It has allowed us to
improve quality and allowed us to do things we couldn’t have done before. Yes, it
has improved access to more resources to improved bloodlines and studs.
Subject Four
Interviewer: When was the company established, and which is its legal form?
Interviewer: How many employees do you have at the moment? (permanent and
non-permanent)
Respondent: 21 Years
Respondent: so 200 we own and 300 on farm. The other 100 are managed on behalf
of other people, either investors or people building their own herd.
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Interviewer: In which markets does your company operate (local, national,
international). Ask for more details about each market (eg international, where
exactly)
Respondent: All,
Interviewer: From which market the major part of your turnover is coming from (local,
national, international)?
Interviewer: Age?
Respondent: 38
Interviewer: Sex?
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Respondent: Male
Background on Industry
Interviewer: How would you describe the current state of the UK Alpaca industry?
Respondent: Growing, lucrative and full of potential. Well we believe that only a
small proportion of the market is being tapped, and through education and promotion
we believe that the industry can expand to ten times its size in the next 10 years.
The industry needs to grow in terms of live animal numbers. Australia have been
going 10 years before us, they have a herd of 300,000 and we have a herd of
35,000.
Interviewer: How would you describe the major changes to UK Alpaca industry in the
last 5 years?
Respondent: Well certainly the development in the fleece market, that has been a
big change in the last five years. With the price of fibre increasing for the grower. The
European market has also opened up further.
Interviewer: What would you say are the main reasons for the fibre prices increasing
for the grower?
Respondent: Just general promotion and the large quantities becoming available, the
process can do more with it; it can appeal to a better market with a higher volume.
Awareness is a key reason, the awareness that the fibre exists in this country as
before most of the fibre has been imported from Peru.
How much do you feel pressured by your competitors in the industry? (Try to define
the level of competitive pressure, low-mild, medium, intense, harsh)? Why? Give
evidence for your answer
Respondent: Medium
Interviewer: Where do you see the UK alpaca industry progressing in the future?
Respondent: Growing in live animals, as we have the land and the farms to do that.
In parallel to that and the fibre production increases with that two fold. The quality
level are increasing, due to the growing herd and the collective breeding going on.
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Interviewer: Where does the industry need to innovate?
Respondent: Yes,
Respondent: That’s a very good question, 10, all Huacaya they are all black.
Respondent: 8
Respondent: 4
Interviewer: What are the key reasons for co-owning alpaca stud males?
Respondent: There are two reasons, one affordability, also being the only option to
gain access to these males, and three we co-own some on our farm that we share a
farm with in Holland, it gives us access to another market. We have been sharing a
farm in Holland for 3 years.
Respondent: The other farm breeds the male, we approach them, they won’t give the
option to buy outright, so it gives us access.
Interviewer: How does co-owning help you and the alpaca industry?
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Respondent: It helps me by getting a good stud male, covering as many females as
possible and creating progeny. It also allows me to buy the best without having to
spend the capital to do that. So I still get as much access as I need to the males, but
I don’t need to outlay all that capital. Yes it has improved the quality of the herd.
Interviewer: How does co-owning help you and the alpaca industry?
Interviewer: How do you decide when to and not to co-own a stud male?
Interviewer: Is your company in any way engaged in a co-opetition activity, i.e. are
there any other areas where you cooperate with competitors?
Respondent: We do, in regards to fibre collection, not all but some. Sometimes we
do joint marketing together. This is with the breeders we co-own with.
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Respondent: We get a better price because it is higher volume. The marketing gives
us more impact. Generally because we can afford more advertising space.
Interviewer: Which were the main challenges that you have faced while trying to co-
operate with a competitor?
Respondent: Only sometimes the travelling distance for the animals is challenging
and general access to the males. We carry out matings from May to September so
there is high demand for these males.
Interviewer: Have you co-operated with a competitor in order to be led to new ways
of producing or doing business or to develop new products (services) (innovation)?
Respondent: Yes it has, so there have been different events that we have run, which
has appealed to a different market place. Also different ways of marketing in general
with different ideas.
Interviewer: Have you co-operated with a competitor in order to secure your product
prices from declining?
Respondent: Yes it has, prices have been more regulated and there is more of a
level playing field.
Interviewer: Have you co-operated with a competitor in order to split risk for an
operation?
Respondent: Yes it has, generally from farms being shut down and having
movement restrictions, you can call your other co-owned males to earn you an
income as they are off site. Also split risk in case the male doesn’t perform, but that
doesn’t happen often. Your outlay is less so your risk is reduced of losing that
money.
Interviewer: Would you prefer to co-operate with a competitors who is smaller/ larger
than you?
Respondent: Oh yes absolutely they need to have a size that warrants spending the
money on a co-owned male; they need to be a large size.
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Interviewer: Would you prefer to co-operate with a competitors who are closer to you
(geographically/ culturally) or with more distant ones?
Respondent: If the male is shared and used for outside stud servicing, we look for it
being positioned around the country in strategic areas to yield a greater market.
What we wouldn’t do is have 3 males in west Dorset as we are all trying to access
the same market.
Coopetition Risks
Respondent: Yes, trust to look after the animals properly. We have husbandry
practice agreements within the contract.
Interviewer: What kind of risks has your company faced while co-operating with a
competitor?
Interviewer: How do you manage these risks? What kind of measures do you take?
Subject one
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General questions about the company
Interviewer: When was the company established, and which is its legal form?
Respondent: I guess the company was established, when we bought the alpacas or
sometime soon afterwards. We didn’t intend to be commercial, just alpaca owners,
we bought our first alpacas back in 2000. And probably a couple years after we
formed spring farms partnership which is where we buy and sell our alpacas through.
Interviewer: How many employees do you have at the moment? (permanent and
non-permanent)
Respondent: We have one full time employee, that is a five day a week post. We
have one part time employee which is three days a week. Both permanent. We have
a couple of causal self employed people who work from time to time covering
holidays etc. One helps with the alpaca management the other mainly farming
management, tractor driving, hay making that sort of thing.
Respondent: Yes, the reason being is that they don’t need to be quarantined.
Alpacas that come from either the states or Australia are quarantined for six months.
The attraction to sell into Europe is that if you buy from Europe that your stock will
not be quarantined for six months.
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Interviewer: From which market the major part of your turnover is coming from (local,
national, international)?
Interviewer: Age?
Respondent: I was born in 1961. (54)
Interviewer: Sex?
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Female
Background on Industry
Interviewer: How would you describe the current state of the UK Alpaca industry?
Respondent: Probably challenging, for a number of reasons. Firstly for price decline
because of a number of reasons, one being the number of alpacas increased. What
you would expect from supply and demand. That is overload by the fact of security
and disease that affect the alpaca industry. You can’t avoid the fact that they catch
TB. There are regional variations on who is selling alpacas which has a huge impact
on the price.
Interviewer: With the tb risk, would you say that that is a major impact to price
fluctuations?
Respondent: Not so much for us do to our region but TB does have a major price
influence on the overall industry.
Interviewer: How would you describe the major changes to UK Alpaca industry in the
last 5 years?
Respondent: In terms of fibre, I would say quite promising. There is a lot of interest
in developing the fibre and promoting fibre. There has been a real resurgence in the
sale of natural fibres. Because of the smaller scale of fibre compared to other, alpaca
fibre is a niche market rather than a huge global market. I am hoping that we will
develop Suri Alpaca fibre further which is a unique niche within alpaca fibre
completely different from Huacaya. Huacaya is more comparable with sheep but not
quality wise.
Interviewer: How much do you feel pressured by your competitors in the industry?
(Try to define the level of competitive pressure, low-mild, medium, intense, harsh)?
Why? Give evidence for your answer
Interviewer: Why
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Respondent: Because in our case, we are very different to a lot of other breeders.
We are not just selling alpacas, we have a whole farm approach. Also because of
our training in alpacas and people we occupy a different niche. So I do not view my
competitors as being other large breeders. We are a medium breeder but our
approach is acting a lot like a smaller breeder. Which I hope makes us an interesting
prospect. We have more choice than a small breeder. We are more suited for new
buyers buying from us because we can give them a high degree of input.
Interviewer: Where do you see the UK alpaca industry progressing in the future?
Respondent: I think I would say more of the same, there is always going to be
pressure on prices. I think a lot of that will depend on general interest from Europe. I
think a lot of that will depend on disease. Europe will l be a huge part and will be very
encouraging for our industry.
Interviewer: How would you see the alpaca industry cracking in Europe?
Respondent: More interest in Europe and to some extent educating in alpaca fibre.
This would be a great starting point. More shows abroad and more people interesting
in going to those shows. General awareness about alpacas, particularly for large or
small farms.
Interviewer: In which fronts do you see your competitors progressing at a faster rate
than yourselves?
Respondent: It can be a numbers game but this can be a negative. The more you
invest the more you need to be successful. We have the whole farm approach. We
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have a holiday let, we have alpaca walking here. We are showing what the lifestyle e
can be like. We didn’t set out to do that. That is an attractive element of our
business. Visitors are happy with experience which can generate into purchasing.
Respondent: 8 with 3 breeders. 5 are with one breeder. The other two are with one
and the one with one breeders.
the other breeder we co own 5 with, a large proportion are from those studs. It’s
complicated, because we bought 6 with one breeder and we wholly own one of
them. We use that one more ourselves. The most recent, co-owned are of the Suri
part, so the majority of the offspring are from co owned. It is a long term process
because the pregnancy lasts 11 months and they can’t breed for three years so it is
a long process. There is a long time between buying and co owning and actually
having breeding animals from them, with the qualities and characteristics that we
want.
Interviewer: What are the key reasons for co-owning alpaca stud males?
Respondent: Well I would say financial risk really, they are very expensive to buy,
particularly when imported which ha number of ours were. An expensive business
importing animals and it helps you to aspire higher. Higher value and impact
animals. You never buy an animal if you think is a waste of money. Particularly with
non proven males. Even the best studs are defined by what their offspring. You only
need 5-8 offspring to get an indication of the quality level.
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Interviewer: How would you say co-owning helps you as a breeder?
Respondent: In the quality of the offspring that you achieve. If you then do not
achieve this than you are sharing the risk and the loss of the stud that is not
achieving your standards.
Interviewer: How does co-owning help you and the alpaca industry?
Respondent: It definitely helps the industry to move forward because we are bringing
in more genetically diverse animals. I think that a criticism of importing from abroad
is the perception that they are better as it means you can overlook and exclude the
quality produced in this country.
Interviewer: How do you decide when to and not to co-own a stud male?
Respondent: The knowledge of the breeder and knowledge of the alpaca. That can
involve the shape and colour. As well as the specialisation of the other breeder in
producing alpacas of that colour. Mostly it is fibre quality and progeny. Progeny
testing is a great way of testing the alpaca quality as well as the breeder.
Respondent: the most recent import we have been involved in is 3 years, including a
year in quarantine. Oldest co own is 8 years.
Respondent: The larger breeder co owns with others, from their point of view it
massively lowers their costs and they can purchase more studs.
Respondent: Both, we have contracts with some. The main breeder with are involved
with we have a contract with is because there is a formula in breeding. Some there
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are no written contracts, so informal. Other than first refusal if you wanted to sell it
on.
Respondent: Reduced financial risk and improved quality of fibre from offspring as
well as gaining knowledge.
Interviewer: Which were the main challenges that you have faced while trying to co-
operate with a competitor?
Respondent: I suppose, a challenge is getting use of the stud when other breeders
are involved. Because what we will not do is allow an animal enter our farm when it
has come from another one straight away because of the problems with parasites.
Interviewer: Have you co-operated with a competitor in order to be led to new ways
of producing or doing business or to develop new products (services) (innovation)?
Respondent: Yea I would say so. We learn from other people and what they are
doing, we have a lot of contact with the people we co own with there is an open
dialogue. An example is that one of our co owners has an alpaca walking business,
we do the same and have been very successful as a result. We process fibre
together which allows for economies of scale which improves our prices and profits
for products such as selling yarn.
Respondent: Other than reducing risk and increasing quality available, no.
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Interviewer: Have you co-operated with a competitor in order to secure your product
prices from declining?
Interviewer: Have you co-operated with a competitor to face threats driving from the
evolution of another industry (eg wool)
Interviewer: Have you co-operated with a competitor in order to split risk for an
operation?
Respondent: In terms of reducing the financial risk wholly. You can also judge the
success of the male by the offspring it has produced for the other breeders. It helps
you gain valuable information therefore spreading the risk. That is if we are open.
Interviewer: Would you prefer to co-operate with a competitors who are closer to you
(geographically/ culturally) or with more distant ones?
Coopetiton Risks
Interviewer: What kind of risks has your company faced while co-operating with a
competitor?
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Respondent: Depends where they are situated. Disease is a factor. Other than that
there are limited risks involved.
Interviewer: How do you manage these risks? What kind of measures do you take?
Respondent: Security such as not having any animals coming into the farm from
others.
Respondent: Very beneficial both in information with quality of offspring and finically
with spreading risk and improving quality.
Subject two
Interviewer: When was the company established, and which is its legal form?
Respondent: We bought our first animals in 2005 and shortly after that began our
business. It is a ltd company.
Interviewer: How many employees do you have at the moment? (permanent and
non-permanent)
Respondent: We have two full time employees and three part time employees
including staff who deal with the farm management element such as hay making and
field management. So five in total.
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Respondent: We have 56 Alpacas currently
Interviewer: From which market the major part of your turnover is coming from (local,
national, international)?
Respondent: Nationally, mainly from local and further reaches in the UK.
Interviewer: Age?
57
Interviewer: Sex?
Female
Background on Industry
Interviewer: How would you describe the current state of the UK Alpaca industry?
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Respondent: Changing, large changes in the amount of alpacas available which
affects sales. The strains of agricultural law and the negative risk of disease such a
TB.
Interviewer: How would you describe the major changes to UK Alpaca industry in the
last 5 years?
How much do you feel pressured by your competitors in the industry? (Try to define
the level of competitive pressure, low-mild, medium, intense, harsh)? Why? Give
evidence for your answer
Interviewer: Where do you see the UK alpaca industry progressing in the future?
Respondent: I believe that the industry will be moving to increase the quality of the
fibre available in this market.
Interviewer: How many alpaca studs do you own wholly, how many co-own?
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Respondent: We only co own one alpaca with one other breeder
Interviewer: What are the key reasons for co-owning alpaca stud males?
Respondent: The key reasons are to reduce our risk of owning alpacas both financial
and breeding risk of the quality that they produce. Other than that it is also gaining
the expertise and knowledge of the other breeder so we can then learn from them to
apply it to grow our business.
Interviewer: How does co-owning help you and the alpaca industry?
Respondent: Co-owning helps us to improve the quality we have. It also will help the
alpaca industry overall because it will improve the access for other breeders to
improve the quality that they have in their herd, so improve the overall fibre quality in
the UK.
Interviewer: How do you decide when to and not to co-own a stud male?
Respondent: Knowing about what the breeder has previously done as well as
information about the stud male in question, if they are proven or not.
Respondent: Yes, they are a larger breeder and co-own with other smaller breeders.
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Interviewer: Do you co-operate with a competitor in a formal or informal way?
Respondent: I would say the sharing of information and knowledge of our business
with the co-owning breeder, in order to keep an open dialogue and provide new
ideas and strategy to drive our businesses forward, such as sharing fibre sorting and
yarn production to increase our stock levels and reduce our costs and risk.
Interviewer: Which were the main challenges that you have faced while trying to co-
operate with a competitor?
Interviewer: Have you co-operated with a competitor in order to be led to new ways
of producing or doing business or to develop new products (services) (innovation)?
Respondent: Well, learning new ways to utilise our unique products such as our yarn
and other products came as result of learning from our co-owning breeder.
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Respondent: Due to our relatively small size, financial risk and resources were a
factor, by co-owning we massively reduce our risk as well as financial resources
needed. It also means that we have greater knowledge of other resources which are
of benefit.
Interviewer: Have you co-operated with a competitor in order to secure your product
prices from declining?
Respondent: Unfortunately the price decline is apparent even with co-owning and
improving our quality because of other factors such as disease scares and increase
number of breeders.
Interviewer: Have you co-operated with a competitor in order to split risk for an
operation?
Respondent: Yes with the financial risk, but also the risk of failure if the stud does not
perform, you do not bear the full cost including the time spent.
Interviewer: Would you prefer to co-operate with a competitors who is smaller/ larger
than you?
Respondent: Probably a larger breeder so we can learn what they are doing which
has allowed them to expand and grow.
Interviewer: Would you prefer to co-operate with a competitors who are closer to you
(geographically/ culturally) or with more distant ones?
Respondent: Geographical location is definitely a factor, the closer they are to us the
easier it is for us to have a line of communication. Also transportation of stud males
makes it easier.
Coopetiton Risks
Respondent: Yes, you need to be able to trust the other breeder won’t use the co-
owned stud for their own benefit by using it beyond the agreed measures, which may
mean that it is an un even proportion of benefit between us.
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Interviewer: What kind of risks has your company faced while co-operating with a
competitor?
Respondent: Other than our herd contracting any disease, the only other risk is that
of non-proportionate benefit of the stud, with the other party gaining more through
better results.
Interviewer: How do you manage these risks? What kind of measures do you take?
Respondent: Communication is key, we are very open with them and they are with
us, so we can examine the quality of the offspring that the stud produces which
allows us to assess the whole project.
Subject Three
Interviewer: When was the company established, and which is its legal form?
Interviewer: How many employees do you have at the moment? (Permanent and
non-permanent)
Respondent: five permanent and various part time staff. We have vet students we
employ some of them, temporary cover.
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Interviewer: How long have you been in the Alpaca business?
Respondent: Holland Belgium, France we are working on both Italy and Spain. The
market for most British breeders has been severely detained by the bovine TB.
Interviewer: Would you say that TB is an impacting factor of Price for alpacas?
Respondent: UK price affected by bovine TB. The whole thing has split the country,
with perceived high risk and low risk areas. It has meant that people have, smaller
breeders have decided to reduce numbers by any cost. So there has been an
element of dumping which has had a greater influence on the price. Dumping started
with the whole debacle of TB in alpacas it has been going on for the last 5 to 6 years
at least.
Interviewer: From which market the major part of your turnover is coming from (local,
national, international)?
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Respondent: I am the company director, I am also half owner.
Interviewer: Age?
Respondent: 62
Interviewer: Sex?
Respondent: Male
Background on Industry
Interviewer: How would you describe the current state of the UK Alpaca industry?
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changes. The overarching thing about the industry is that it is a lifestyle choice to
become involved with alpacas. I think that is where we are at, we are seeing
tremendous progress being made on the fibre side of the business, and that is where
we are focusing our efforts in breeding, that is what we are what makes or breaks us,
that is certainly ahead of pace, it is going really well.
Interviewer: How would you describe the major changes to UK Alpaca industry in the
last 5 years?
Respondent: if think they are economic but the economics have impacted the quality
of the breeding programmes, I think in the main, probably on a percentage basis
people have under invested in their genetics and have sort to take short cuts which
have the potential to impact negatively on the national herd as a fibre producer of the
highest level.
How much do you feel pressured by your competitors in the industry? (Try to define
the level of competitive pressure, low-mild, and medium, intense, harsh)? Why? Give
evidence for your answer
Respondent: I would say in terms of market, low to medium because we tend not to
base our decisions on what other people are doing, we are very focused to what we
are doing and as long as we can pay the bills we won’t make significant changes.
Respondent: To a large extent there is a demand in coloured alpacas. The fibre that
we want to develop is white; our breeding programs have always been dedicated by
white. They are the best animals and that is the way forward for the fibre industry.
However, on a commercial basis we have had to develop our coloured breeding
programmes, we have responded to the market. Rather than our competitors. Have I
enjoyed doing that, no I haven’t. We have made huge investments in genetics in the
last 10 years. In the last 2 or 3 years the genetics we have brought in we have had to
look at colour, ultimately I always thought we would develop a fibre industry. One of
the major fibre buyers cannot get enough white fibre to fulfil their requirements of
white fibre of the right quality.
Interviewer: Where do you see the UK alpaca industry progressing in the future?
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Respondent: The split will become more defined. I think we will see some of the
lesser quality herds relying on the cottage industry to justify their fibre, I think that we
will see some of the older generations retire and there won’t necessarily be
replacements for them. The market at the moment the available information
suggests that this isn’t happening in a great way. People like us the bigger units, we
will be looking at seed stock, end product and meat. I think we will do all of those,
and I predict we will do this in the next 5 years
Respondent: I think it is being looked at. It sits badly, I don’t want to do it. I’ve farmed
my whole life, my history is livestock farming. It’s being looked at and some people
are doing it at a very modest scale. The problem is, to me it is contradictory to the
development of the industry in a sustainable way. We have set it up, in the early
days when the first imports came in in 1996, it was very much about something
pretty and new. Enthusiasm about a dream to establish something. Where we are at
now is that we have a situation, I predicted it when I came in 1998. I worked for an
Australian company, I was European manager. I predicted that we would reach a
point that would be very difficult to get through. That we have awareness for the
fibre, an awareness of the end product, but we didn’t have enough of the raw product
to sustain a market. I think that is pretty much where we have go to now. It has been
made complicated by something I do not appreciate is the huge variance in quality. I
reckon if people focus on meat at this point in time, it would be almost a tacit
statement that we can’t make the fibre work. The meat should be the final step, it
shouldn’t be a step if we have a group of males in another field and we are
scratching our heads and wondering what we are going to do with them. The easy
option is to sell and make them into sausages. We can’t get much value from them,
in the same way we can’t get value in their fibre, we can because of the bloodlines
we are using the longevity of the fibre is second to none. I am looking at those from a
commercial fibre herd, to make them commercial I need to do the end product, which
is sort of what we are doing now
Respondent: We are looking at high end stuff, high end can cover a multitude of
things from rugs to high end apparel we run a large Suri herd. That is the first thing
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we are looking at because no one is doing anything with Suri. I have a tonne and a
half of Suri fleece I need to grade but because of our transition I am struggling to get
the space to work on it.
Interviewer: So you are trying to increase the quality of the market overall?
Respondent: Yes the only way we can make this work is to make sure that we are
producing the best quality is that end product or be that raw fibre. We are not getting
that message across, there is a thing we call barn blindness, a lot of people can’t get
past that their animals are beautiful. When people want to breed with sub quality
males all that does is reinforces into the national breeding programme lesser quality
genetics. In a lot of ways it is sanctimonious to say that because a lot of things are
driven by money and available resources, but you can’t get away from it, there is a
danger that the hobby end, the tail starts to wag the dog, I think it goes back to the
tipping point, there is a danger for that happening so we need to be aware of that.
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Respondent: We co own 16 and have just signed a new contract to co-own another
two so 18.
Interviewer: In terms of those co owned studs how many breeders are you co-
owning with?
Respondent: 2006, we still co-own with the first breeder but the stud isn’t operative.
Interviewer: How many co-owned studs are Suri and do you see Suri’s being a new
market in terms of diversifying?
Respondent: Only four Suris, I think the Suri is the only true niche in the industry. So
that is why we are looking into it. Nobody is processing commercial quantities of Suri
fleece that is why we have been stock piling and hopefully by next spring we will
have some done.
Interviewer: What are the key reasons for co-owning alpaca stud males?
Interviewer: So you can gain more valuable information about the quality of the
progeny?
Respondent: Yes.
Respondent: No because we would sell on the share of failed males due to our
reputation. Most of the co-owned males are imports. They are specially sourced
genetics mostly from the US and Australia.
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Interviewer: What made you choose to co-own?
Respondent: the driver was to make the acquisition of world class genetics
affordable as a business. We have sold shares in homebred males that has been
commercial decision.
Interviewer: How does co-owning help you and the alpaca industry?
Respondent: It also allows the co-owners access to the best genetics. Hopefully, by
people doing that, we are, in some small part, driving forward the quality of the
national herd. It is a difficult industry to buy into high-end genetics due to the huge
value of these males. It makes it affordable to smaller breeders; it makes it
manageable for the fibre. We have split shares of the co-owners across all the
imports which means that if, out of one group, there is a superstar, the co-owners
benefit. What has been a driver for me is that the risk has to be evenly spread
amongst the co-owners, rather than disappointing.
Interviewer: How do you decide when to and not to co-own a stud male?
Respondent: Trade secret, if we identify a line of genetics that are particularly useful,
that is the point when I assess if we can afford to do it on our own, a point is that we
are doing Suri males, out of a blood line that I have been doing for 10 years. I have
finally hooked something together ourselves and one other major breeder have put it
together. That is a direct spread of cost. I am finding the market more difficult to co-
own animals. That may be because our reach wasn’t as great as it was and other
people are doing it. I am also getting to the stage where I don’t want any more males
with another owner, the management is stressful. As everybody is concentrating
their breeding season, it is more pressure on the males and because we are
breeding within the country. We think that stand up with them. We have males
coming through that we need to prove that we think are as good with what is out
there abroad. I judge in America so I get to see the development of other countries. I
have seen what Australia and Europe have. I think with what we have in our genetic
pool in our business let alone the UK we can operate without having to go abroad. In
Huacaya, the Suri is a narrower gene base. We won’t import any more even Suris.
My personal wish is I expect that the co-owners will be using the males from the
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bloodlines of the original co-owned in their programmes, therefore the management
will become simple.
Respondent:
Respondent: The more dynamic of them are selling on the co-owned ones. It has
enabled them to extract values from males that we would normally castrate. By
selling on a half share, we are almost creating a myth that the animal is better than it
is.
Interviewer: Which were the main challenges that you have faced while trying to co-
operate with a competitor?
Interviewer: Have you co-operated with a competitor in order to be led to new ways
of producing or doing business or to develop new products (services) (innovation)?
Respondent: We have ideas, they haven’t worked. Either because of lack of time or
lack of resource and in part because the industry doesn’t seem receptive to the
particular. It is very cautious to new ideas.
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Respondent: With Suri we are pulling in fibre from other competitors herds they will
be involved. It won’t be a democracy, it’s a way that other owners can see something
happen. We sell all the Huacaya fleece to UK alpaca, this is based on the idea that
while we would love to make more money out of the fibre we should be able to help
create a UK fibre industry. The big challenge is getting them to pay enough. They
are making money but they are taking most of the risk as they are developing the
market place.
Interviewer: Would you prefer to co-operate with a competitors who is smaller/ larger
than you?
Interviewer: Would you prefer to co-operate with a competitors who are closer to you
(geographically/ culturally) or with more distant ones?
Coopetition Risks
Respondent: In terms of who we choose, trust has to be first and foremost. The
alpaca industry isn’t any different to any other industry, whether they are small or
larger breeders there is significant amount of money involved. The other side is that
it is a pedigree industry as you have all the breeding societies. Like it or not you have
all the challenging as you would have with other pedigree building. A lot of our
breeding is geared towards the showing. You have to be in a position to trust people
to represent what you are doing as a programme honestly. Because of the nature of
the relationship we have, because of the nature you have to be straight with outside
services. When those services were given. The alpaca industry, is a small pond. The
UK and European wise is small. There are predators, they used to be small now they
are large sharks. You need to be cautious of that. We do not want to be involved with
people whose motives we cannot respect.
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Interviewer: What kind of risks has your company faced while co-operating with a
competitor?
Respondent: there is always a risk of mismanagement of animals when they are off
farm. This could be as simple as over use rendering them infertile for short or long
time. That is the largest risk, it could mean the death of the animals because they
are not insured. The other risk is disease, that is why we are selective in choosing
with biosecurity. There is not a risk of sharing information because we want the world
to know what we are doing. That links back with getting these animals used as much
as possible.to actually find out what they are doing in different circumstances. What
we are proud of is that our client base enjoys a greater success in the show ring than
anybody else. We rate very highly because a lot of our business is repeat business.
Interviewer: How do you manage these risks? What kind of measures do you take?
Respondent: We don’t mix client animals with our main herd. We tend now not to
take animals back in from farms that clients have not been long standing. We do not
take animals from TB hotspots. The perception of TB is a problem fire and is far
worse than it is due to mismanagement. Our new set up will offer more to more
clients with a higher level of buyer security.
Respondent: On the whole there are stresses, but we have had nothing that has
stopped it. We have had one co owning who wanted to stop because they over
stretched themselves. We got them out of it, pain free. That is ultimately because if
an individual is causing a stress we will persuade them to leave. It has allowed us to
improve quality and allowed us to do things we couldn’t have done before. Yes it has
improved access to more resources to improved bloodlines and studs.
Subject Four
Interviewer: When was the company established, and which is its legal form?
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Respondent: So it is a limited company and established in 2006.
Interviewer: How many employees do you have at the moment? (permanent and
non-permanent)
Respondent: 21 Years
Respondent: so 200 we own and 300 on farm. The other 100 are managed on behalf
of other people, either investors or people building their own herd.
Respondent: All,
Interviewer: From which market the major part of your turnover is coming from (local,
national, international)?
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Respondent: Director/ owner
Interviewer: For how long have you been in this position?
Respondent: Since the establishment
Interviewer: Age?
Respondent: 38
Interviewer: Sex?
Respondent: Male
Background on Industry
Interviewer: How would you describe the current state of the UK Alpaca industry?
Respondent: Growing, lucrative and full of potential. Well we believe that only a
small proportion of the market is being tapped, and through education and promotion
we believe that the industry can expand to ten times its size in the next 10 years.
The industry needs to grow in terms of live animal numbers. Australia have been
going 10 years before us, they have a herd of 300,000 and we have a herd of
35,000.
Interviewer: How would you describe the major changes to UK Alpaca industry in the
last 5 years?
Respondent: Well certainly the development in the fleece market, that has been a
big change in the last five years. With the price of fibre increasing for the grower. The
European market has also opened up further.
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Interviewer: What would you say are the main reasons for the fibre prices increasing
for the grower?
Respondent: Just general promotion and the large quantities becoming available, the
process can do more with it, it can appeal to a better market with a higher volume.
Awareness is a key reason, the awareness that the fibre exists in this country as
before most of the fibre has been imported from Peru.
How much do you feel pressured by your competitors in the industry? (Try to define
the level of competitive pressure, low-mild, medium, intense, harsh)? Why? Give
evidence for your answer
Respondent: Medium
Interviewer: Where do you see the UK alpaca industry progressing in the future?
Respondent: Growing in live animals, as we have the land and the farms to do that.
In parallel to that and the fibre production increases with that two fold. The quality
level are increasing, due to the growing herd and the collective breeding going on.
Respondent: Yes,
Respondent: That’s a very good question, 10, all Huacaya they are all black.
Respondent: 8
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Respondent: 4
Interviewer: What are the key reasons for co-owning alpaca stud males?
Respondent: There are two reasons, one affordability, also being the only option to
gain access to these males, and three we co-own some on our farm that we share a
farm with in Holland, it gives us access to another market.We have been sharing a
farm in Holland for 3 years.
Respondent: The other farm breeds the male, we approach them, they wont give the
option to buy outright, so it gives us access.
Interviewer: How does co-owning help you and the alpaca industry?
Interviewer: How does co-owning help you and the alpaca industry?
improves the quality throughout the industry, which is a benefit for everyone, it helps
the industry to grow.
Interviewer: How do you decide when to and not to co-own a stud male?
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Respondent: I decided through my breeding programme that I needed new males.
Some of the co-owned males I have are ones that I owned, so I used it to raise
income, sometimes it is for income and other times it is genetics.
Respondent: We do, in regards to fibre collection, not all but some. Sometimes we
do joint marketing together. This is with the breeders we co-own with.
Respondent: We get a better price because it is higher volume. The marketing gives
us more impact. Generally because we can afford more advertising space.
Interviewer: Which were the main challenges that you have faced while trying to co-
operate with a competitor?
Respondent: Only sometimes the travelling distance for the animals is challenging
and general access to the males. We carry out mating’s from May to September so
there is high demand for these males.
Interviewer: Have you co-operated with a competitor in order to be led to new ways
of producing or doing business or to develop new products (services) (innovation)?
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Respondent: Yes it has, so there have been different events that we have run, which
has appealed to a different market place. Also different ways of marketing in general
with different ideas.
Yes it has, so there have been different events that we have run, which has
appealed to a different market place. Also different ways of marketing in general
with different ideas.
Interviewer: Have you co-operated with a competitor in order to secure your product
prices from declining?
Respondent: Yes it has, prices have been more regulated and there is more of a
level playing field.
Interviewer: Have you co-operated with a competitor in order to split risk for an
operation?
Respondent: Yes it has, generally from farms being shut down and having
movement restrictions, you can call your other co-owned males to earn you an
income as they are off site. Also split risk in case the male doesn’t perform, but that
doesn’t happen often. Your outlay is less so your risk is reduced of losing that
money.
you can call your other co-owned males to earn you an income as they are off site.
Interviewer: Would you prefer to co-operate with a competitors who is smaller/ larger
than you?
Respondent: Oh yes absolutely they need to have a size that warrants spending the
money on a co-owned male, they need to be a large size.
Interviewer: Would you prefer to co-operate with a competitors who are closer to you
(geographically/ culturally) or with more distant ones?
Respondent: If the male is shared and used for outside stud servicing, we look for it
being positioned around the country in strategic areas to yield a greater market.
What we wouldn’t do is have 3 males in west Dorset as we are all trying to access
the same market.
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Coopetition Risks
Respondent: Yes, trust to look after the animals properly. We have husbandry
practice agreements within the contract.
Interviewer: What kind of risks has your company faced while co-operating with a
competitor?
Interviewer: How do you manage these risks? What kind of measures do you take?
Key
Motives
Financial Risk
Mutual Benefit
Information
New Market
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Improved Quality
Sharing Risk
Innovation
Access to resources
Limiting Factors
Trust
Openness
Geographical proximity
Size
Price
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10. Ethics Appendix
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11. Turnitin Report
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