Strategic Alliances: Collaboration with Your Competitors--and Win1
Collaboration is a strategic alliance typically between two firms with the goal of providing mutual benefit for each firm. Collaborating with your competitors is like a double-edged sword. Sharing between firms is a smart strategy as long as the relationship is give-and-take and is one that will benefit both parties without compromising each of the firm’s competitive position in the industry. Firms must be careful in what information is shared across this delicate communication trail. To borrow a line from the Godfather, "keep your friends close, but your enemies closer". This article's discussion of competitive ...view middle of the document...
Companies must defend against competitive compromise. Companies need to make sure that employees at all levels understand what corporate information is off limits to the partner. Compromising too much information can make you vulnerable to losing market share to your partner. Learning from partners is paramount. Remember that Asian companies focus on learning, while Western companies want to demonstrate their superiority and leadership. This provides partners with knowledge that will benefit them in the long-term. You cannot make a Western company want to learn. Western companies have certain arrogance after decades of leadership that detracts from their ability to learn. Why collaborate? 1. Gain technological advancement at a relatively low cost.
Gary hamel, Yves L. Doz, and C.K. Prahalad, Harvard Business review, January-February 1989, pp. 133139.
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Gain market access at a low cost. Gain insights into the partner’s business practices and strategies. Strengthen competitive advantages or core competencies. Develop benchmarks through examination of the practices of the alliance firm.
Three situations can result in mutual collaboration is most successful: 1. The partners’ strategic goals converge while their competitive goals diverge. 2. The size and market power of both partners are modest compared with industry leaders. 3. Each partner believes it can learn from the other and at the same time limit access to proprietary skills. Companies may think it devious to partner with a competitor to “steal” their secrets and use them to their advantage. However, forming a strategic alliance is usually beneficial to both parties, each contributing what they know and learning what they need to know from the other company to accomplish a goal that is not possible otherwise. Risks of collaboration Competitive Collaboration can strengthen both companies against outsiders, however it has triggered unease about the long-term consequences. Western firms commonly exhibit a lack of strategic intent in collaborative efforts. Western firm’s primary goal is often cost reductions when entering into a collaborative agreements. The strategic intent problem is amplified by the fact that Western firms generally place little or no emphasis on learning from the alliance partner. It is believed that Western firms often seek “quick and easy” fixes to organizational problems when they enter into a collaborative situation. Western firms often take on the teacher role in a collaborative situation and are quick to demonstrate and explain aspects of their business strategies and competitive advantage. The contribution of a Western firm in a collaboration effort is often in the form of technology and is relatively easy for the alliance firm to transfer. In many instances, Western firms are less skilled at limiting unintended competency transfer than their Japanese counterparts. As a result: 1. A firm’s competitive position may weaken relative to the...