COOPETITION

Business is War and Peace

Cooperation in creating value

Competition in dividing it up Not cycles of War, Peace, War ...simultaneously war and peace
You have to compete and cooperate at the same time

Definition
Coopetition is a neologism coined to describe cooperative competition.

Coopetition occurs when companies work together for parts of their business where they do not believe they have competitive advantage and where they believe they can share common costs.

COOPERATION + COMPETITION = COOPETITION

Ignores the point that competition and cooperation can co-exist. Examples include the development of Advanced Photo Film, DVD, etc. Sometimes it may be in the best interests of players not to jump to the next level of dynamic competitive interaction but into co-operative competition - coopetition This requires figuring out the situation the firm is facing and then looking at the firms valuenet

Questions to ask yourself are: Who are the key players?

duopoly game; oligopoly game; etc pricing game; advertising game; etc.

What options are open to the players?

What goals are the players pursuing

market share? profits?..

issues the players agree on, sources of conflict, etc..

Are goals complementary or conflicting?

What is the time structure of the game?

one shot, repeated, simultaneous, sequential, etc..

information as a source of bargaining strength

What is the information structure of the game?

The ValueNet
Customers

Substitutors

Company

Complementors

Suppliers

A player is a complementor if customers value your product more when they have the other players product than when they have your product alone.
Bread and Butter

A player is a competitor if customers value your product less when they have the other players product than when they have your product alone.
Pepsi and Coke

Cars Televisions TV shows Fax machines

Auto loans, insurance, roads VCRs TV guide Phone lines

Catalogs
Hardware

Delivery services
Software

THE SUPPLY SIDE

A player is your complementor if its more attractive for a supplier to provide resources to you when its also supplying the other player than when its supplying you alone A player is your competitor if its less attractive for a supplier to provide resources to you when its also supplying the other player than when its supplying you alone Compaq & Dell compete with each other for the latest Intel chip complement each other in defraying Intels R&D costs

Competitive threat or complementary opportunity?

Movie theaters & video rentals

Traditional & Internet booksellers (BookZone)

It is Trade Off /Finding the middle path

For co-opetition to work, companies need to very clearly define where they are working together, and where they are competing.

 When

restaurants work together, they can create a much larger and more valuable market that they ever could by working individually. Restaurants can then compete with each other to determine who takes the largest share of the increased number of potential customers.

 When

there is section of a city or town that has several restaurants concentrated in a relatively small area. Why should anybody open a restaurant in an area already full of restaurants? Abundance of places to eat attracts customers , make their decision when they arrive. This is where the competition starts.

THANK YOU!!