Chapter Four “Players” Jennifer Mele and Molly Patrick

Becoming a Player Bittersweet Success: Holland Sweetener Holland Sweetener & Monsanto Holland Sweetener Another Coal Porter: Norfolk Southern Norfolk Southern & CSX Norfolk Southern -Should have sold competition -Could have been “Paid to Play”

Becoming a Player Cont… Answering the Call: McCaw & BellSouth Answering the Call: McCaw & BellSouth -Both companies were “Paid to Play” -BellSouth recognized who stood to gain  Look at the whole market before you enter -competition is valuable, don’t give it away -get paid to play

7 Ways to Get Paid to Play 1. Ask for contributions toward your bidding expenses. 2. Ask for a guaranteed sales contract 3. Ask for a last-look provision 4. Ask for better access to information 5. Ask to deal with someone else 6. Ask to bid on additional pieces of business 7. Ask the customer what he would pay

8 Hidden Costs of Bidding 1. Better uses of your time 2. When you win business, you lose money 3. The incumbent can retaliate 4. Your existing customers will want a better deal 5. New customers will use the low price as a benchmark 6. Competitors will also use low price as a benchmark 7. It doesn’t help to give your customers’ competitors a better cost position 8. Don’t destroy your competitors’ glass house

Calling all Players What to do when a customer wants you to match a bid… What to do when a customer wants you to match a bid… - People make up bids - Remind the customer of your track record - If customer values the relationship, you won’t need to meet it entirely - May be better to let them go

Bringing in Other Players Bringing in Customers Bringing in Suppliers Bringing in Complementors Bringing in Competitors

Customers Why bring in customers? - it’s a bigger pie - more sales - more profits - lowers the added value of all the existing ones

Customers How to bring in customers - educate the market - pay them to play - stimulate complementary products - become your own customer

Suppliers Why bring in suppliers? - no one supplier is essential - buyer becomes stronger How to bring in suppliers - pay them to play - pay them to play - form buying coalitions - form buying coalitions - become your own supplier - become your own supplier

Complementors Why bring in complementors - raises your added value - the more the merrier How to bring in complementors - form a buying coalition of behalf of customers - form a buying coalition of behalf of customers - pay them to play - pay them to play - become your own - become your own

Competitors Why bring in competitors - pushes you to be your best - increases customer interest How to bring in competitors - license your technology - license your technology - create second sources - create second sources - promote internal competition - promote internal competition

Changing the Players Who stands to gain from your entry? Who stands to gain from your entry? Should you play? Should you play? Changing the players Changing the players - customers - suppliers - complementors - competitors