Collaborating with competitors

VARIS C. 5180046 WORAKIT R. 5180139 KAMORNRAT P. 5180293

INTRODUCTION
Alliance among competitors have risk One study estimate that U.S. company lost $50 billion a year in 1995
However alliances among competition are more popular, estimated 10-30 % of alliances in 2000

INTRODUCTION

He give a new term to describe the process of collaborating with competitor

co-opetition
Ray Noorda, CEO of Novell

Example of alliances involving co-operation

Ten years research program to reinvent the modern camera

Example of alliances involving co-operation

To sell their food products Online

Database Business To gain greater scale

Online Service

The automotive business to business exchange

Why Co- opetition is important

1. The rise of the Internet and the concomitant

need for competitors to define and expand new market 2. The blurring of industry boundaries

Not all Co-opetitions are success Success

Because They can manage the balance between cooperation and conflict

Fail
Because Lack awareness of cause and challenges of co-opetition

Drivers of Co-opetition
Competitor VS Non Competitior

The degree of competitive threat in order to set strategy

Motivation for collaboration among rival

Traditional Reason
Setting standard: Shift from heavy to high technology industry Sharing risk :

Developing ne innovation such as biotechnologies

Entering emerging market : New Customer and Low cost production

Motivation for collaboration among rival

New Reason in 1990
Expanding Product Line

Reducing Cost

Motivation for collaboration among rival

Gaining Market share

Creating new business

Managing the Risks of Co-opetition

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5 important risks Technology leakage Telegraphing Strategic Intention Customer Defection Slow Decision Making Business or Asset Fire Sale

Schwinn & Giant

Risk 1: Technology Leakage

Occurs when a partner use alliance to acquire certain know-how, which is then use against you later

Solutions
Controlling information
Contact Rules and policy

Risk 2 Telegraphing Strategic Intention

The risk is when your competitor knows your strategic plans The direct transfer of information to partner

Solution
Managing the information for example,

1. Developing guideline for sharing information 2. Teach the manager what information is
strategic

Risk 3 Customer Defection

The competitor may get into contact with your customer. Partner might increase its brand awareness, customer understanding and direct personal relationship to steal customer away.

Solution
Never give full contact of customer to partner
Allow partner to access to customer only

when selling jointly product

Risk 4: Slow Decision Making

Solution
They should make the agreement on who are responsible in which area Focus on basic of decision making identify the most important decision that define which decision maker will participate in those

decision

Risk 5 Business or asset fire sale

create the risk of a fire sale
firm will be force to sell its interest in the

alliance at a below market price. After they separate then the third party will be much less in the asset once they tied up the joint venture

Solution
Favor the independent joint venture structure, which will reduce cost and increase the interest of other buyer
Avoid Joint venture