2.  Co-opetition  Radar Screen Competitor Map  Reasons for an Alliance with Rivals  Managing the Risk of Co-opetition Contents

3. CO-OPETITION  Co-opetition is the process of collaborating with a competitor.  Alliances among competitors introduce considerable risks  However, 10%-30% of all alliances in year 2000 is in the form of co-opetition. WHY?

4. work together in a research program to reinvent the modern camera work together to sell their food products online work together to share their logistic route Kodak & Fuji Kellogg, Pillsbury & Nabisco Kellogg, Pillsbury & Nabisco Nestle & Mars  Competitors come together to expand and define a new market. CO-OPETITION

5. RADAR SCREEN COMPETITOR MAP  Understanding co-opetition requires a more appropriate definition of “COMPETITOR”.  Think not in term of COMPETITOR vs NONCOMPETITOR.  Rather think in term of the degree of competitive threat.

6. RADAR SCREEN COMPETITOR MAP  Degree of competitive threat: Radar Screen Competitor Map (Tool help to aid the degree of competitive threat) Help to visualize how competitor are positioned relative to your company and each other. Help to identify the future strategic direction. Help to assert the potential value of collaborating with a rival.

7. REASONS FOR AN ALLIANCE WITH RIVAL  Well known reasons for collaborating among rivals: Setting standards: risen as economy shifts from heavy industry to high technology. Sharing risk: sharing various risk including risk of uncertainty when entering new market. Entering emerging market: to access new consumers or to secure low cost production centers.

8. REASONS FOR AN ALLIANCE WITH RIVAL  Emerging reasons: Expanding product lines: offering more service/product lines First Union and Charles Schwab Reducing cost: forming alliances to combine similar assets and reduce cost Sony and Ericsson

9. REASONS FOR AN ALLIANCE WITH RIVAL  Emerging reasons: Gaining market share: gaining market share and generating powerful network effect DaimlerChrysler, Ford and General Motors Creating new business: combining complementary capabilities and creating wholly new sets of skill NBC and Microsoft

10. MANAGING RISKS OF CO-OPETITION  Emerging reasons: Technology leakage: when company’s core technology or process falls into a competitor’s hand. Reducing risk by controlling information Limiting the scope of alliance Drafting contract that clearly define on technologies ownership Regulate information flow within firm to guide employees on what to share and what not to share Appointing a gate keeper where allowing only one person/ unit to have a contact point with the partner

11. MANAGING RISKS OF CO-OPETITION  Emerging reasons: Telegraphing Strategic Intention: allowing competitor the ability to predict our future strategic plan. Reducing the risk by better managing information flows With the help of senior management, a guidelines should be followed in sharing strategic information

12. MANAGING RISKS OF CO-OPETITION  Emerging reasons: Customer Defection: putting current or potential competitors into contact with our customers/ increasing the risk of the partner to use its increased brand awareness, customer understanding and direct personal relationship to steal customers away at some future date. Reducing risk by insist on a jointly interaction with customers Demanding a reciprocal access to partner’s customers Allowing partners to access our customers only when selling a jointly owned products

13. MANAGING RISKS OF CO-OPETITION  Emerging reasons: Slow Decision Making: slow decision making, shallow cooperation or even abandonment Reducing risk by focus efforts at different points along the value chain Agreed on who does what well and clearly divide up job description Identifying from 10 to 50 most important decision that alliance will face and pre define which decision maker will participate in those decisions.

14. MANAGING RISKS OF CO-OPETITION  Emerging reasons: Business or Asset Fire Sale: the risk of the firm that will be forced to sell its business in the alliance below market price. Agreeing up front on the sale price Favoring an independent joint venture structure that will reduce the complexity of a sale and increase the interest of other buyers Small firms should avoid traditional joint venture with larger competitors