Model Name : Coopetition Strategy
Creator : Adam M. Brandenburger and Barry J. Nalebuf
Year :
Purpose : Cooperation strategies | Business advantage | Strategic alliance | Business competitors | Network economy

All the business organizations agree, be it a large in a corporation or a small start-up, that competition is the bedrock of the business world.

Competition generates many advantages for customers and organizations but, mostly it engenders numerous threats and risks for the companies.

Probably, many times it comes to your mind that your competitor might stop competing with you and you two become friends and achieve more profits, enlarge your company, avail equal benefits, and prosper mutually.

For cooperative and positive thinkers like you, a new and hybrid concept of ‘coopetition strategy,’entered into the business world in the late 1990s, the idea of which pioneered by two Harvard and Yale University Professors, Adam M. Brandenburger and Barry J. Nalebuf.

People of old traditions, believe in the notion of “winner takes all,” and you can’t do anything except you become a winner or remain a loser.

However, with this counter-intuitive but an amazing ‘networked-economy’ strategy you can give your organization an interesting flair of both competition and co-operation.

Great! Right?

Read this article to determine how you can do both; compete and cooperate with your competitors at the same time.

What is Coopetition Strategy ?

Coopetition strategy is a model that comprises a network of stakeholders and competitors working with each other to acquire the highest value.

Recently, this phenomenon is gaining great significance among various business entities. It leads to mutual benefits for both the companies, allowing them to build favorable relationships, expanding their businesses to new horizons and increasing their knowledge and information in the corporate world.

Traditionally, every business owner was looking to beat his competitor, and a cut-throat competition was preferred. However, today people transformed into a more ingenious concept of “working together” for the sake of both parties’ benefits.

Growing possibilities offered by internet and technology also add essential advantages to this concept. Connecting with your stakeholder, your customer, and even your competitor is not difficult any more with these advancements.

Thus, companies stay in touch with their competitors, interact with them, share their ideas, and work with each other to perform better things and make the most out of their success.

GROW THE INDUSTRY

This strategic alliance between two firms brings more merits to them. The today’s global village practices the economy of a connected and networked-based economy in which we are not restricted or confined to our own world.

Thus, coopetition strategy empowers and strengthen the organizations to develop new market opportunities, formulate strong business strategies which cover a larger world and produce products and services to reach customers out of the borders.

You can see in the figure that a company deals with four players.

1) Customers, to which you serve through your products and services,

2) Suppliers, who supply you the required resources,

3) Competitors, who play to bring you down and you do the same, but a new term here, which differentiates this model from others’, is

4) ‘Complementors’. These are not actually new people but are those competitors who agree to work with you and add superior value to both of your products and services.

For better coopetition, it is up to the wise decision-making of the companies to decide when to compete with their rivals and when they should join hands together to obtain a mutual business advantage.

What is the Logic behind Coopetition Strategy?

Now, an acute question crops up into your mind: what is the rationale behind this strategy?

Coopetition strategy depends upon the goal of moving from a zero-sum game to a plus-sum game.

The zero-sum game occurs when a winner eats the entire business cake, leaving not a single pie for the loser.

In contrast, plus-sum game impels both the parties to share the profit by working together. At least, no one is left empty-handed in the end!

There are three major motives for the companies to adopt coopetition strategy:

1. Expand the current market’s size or develop a whole new market:

One of the most obvious reasons for coopetition is to increase the market size and products and services. Firms can improve their current products through their collaboration with an eminent company who is offering more or less similar products.

They can also introduce new products with the help of each other’s ideas and efforts. In this way, their costs and risks will also be minimized, and they can gain a more dominant position in the market over other competitors.

For instance, Toyota and Ford, two biggest competitors, teamed up and design Atlas Ford F-150 Hybrid concept in 2013 which turned to be the best-selling hybrids in the automobile industry.

2. To utilize a few resources more efficiently:

Firms are also worried about the scarcity of their resources. Thus, every firm desire to utilize its current resources most efficiently and maintain their existing market share.

Coopetition strategy enables business firms to integrate their resources and produce goods according to their standards with fewer risks and better efficiency.

For example, two rivals Sony Cooperation and Samsung Electronics partnered together to develop new flat-screen LCD TV panels.

3. Acquire a larger share in the market and enhance the competitive position

Protecting the current market share and widening it further is every company’s motto. If two companies join together through coopetition, they can gain more significant market share and even beat the other main competitors in the market.

For example, Google Chrome and Mozilla are working together to beat their principle rivals Microsoft and Apple. Google is supporting and funding Mozilla for its Firefox web browser to constrain the influence of Google Chrome’s biggest rivals Microsoft’s Internet Explorer and Apple’s Safari.

On the other hand, Microsoft and Apple are working together for the license of mobile operating system features and patents.

Few Giant Companies Practicing Coopetition Strategy

Most high tech companies are pursuing this technique. Other big names of the companies who work on coopetition are:

• Apple’s iPad and Amazon’s Kindle App – Kindle App is available on iOS, and Mac

• Blu-Ray and HD-DVD

• GE Healthcare and Intel Health IT

• Fed-ex and UPS serving together U.S Postal Services