Coopetition is a business strategy where companies cooperate and compete with each other at the same time. In coopetition, companies may work together to achieve a common goal, such as developing a new technology or creating a new market, while competing for market share and profits.
The term “coopetition” was coined by Ray Noorda, the former CEO of Novell, in the 1990s. The concept is based on the idea that while competition is a necessary component of any market, collaboration and cooperation can also benefit all parties involved.
The basic premise of coopetition is that businesses can achieve tremendous success by working together than competing against each other. Competitors can reduce costs, share resources, and accelerate innovation by cooperating on certain aspects of their businesses, such as research and development, marketing, or distribution. At the same time, they can continue to compete in other areas, such as pricing or customer service.
Examples of coopetition can be found in various industries, such as technology, where companies may collaborate on developing a new product or standard and compete for customers in the marketplace. Coopetition can also be seen in the airline industry, where airlines may partner to share resources, such as airport gates or maintenance facilities while competing for passengers.
Coopetition can be an effective strategy for businesses looking to collaborate with their competitors to achieve mutual benefits. However, careful planning and management must ensure the benefits outweigh the risks.
Advantages and disadvantages of coopetition
Advantages of Coopetition:
- Resource Sharing: Coopetition allows businesses to share resources, knowledge, and expertise, leading to more significant innovation, cost savings, and improved productivity.
- Reduced Costs and Risks: Businesses can reduce costs and risks associated with innovation and development by sharing resources, knowledge, and expertise.
- Increased Market Power: By working together, businesses can create a more prominent market presence and increase their bargaining power with suppliers and customers.
- Improved Customer Experience: Coopetition can lead to improved customer experience by developing better products or services.
- Access to New Markets: Coopetition can help businesses enter new markets and gain access to new customers.
Disadvantages of Coopetition:
- Loss of Control: Coopetition can result in losing control over intellectual property, strategic direction, and market positioning.
- Conflicts of Interest: Coopetition can create conflicts of interest between competitors, particularly if they have different objectives or goals.
- Dependence on Competitors: Coopetition can create a reliance on competitors for resources, knowledge, and expertise, which can be risky in the long term.
- Lack of Trust: Coopetition can be challenging to manage, particularly if there is a lack of trust between competitors.
- Risk of Information Leakage: Coopetition can create a risk of information leakage, particularly if competitors are sharing sensitive or proprietary information.
In summary, coopetition can be beneficial for businesses looking to collaborate with their competitors to achieve mutual benefits. However, it also has risks, and businesses must carefully weigh the advantages and disadvantages before entering a coopetitive relationship.
Coopetition examples
Here are some examples of coopetition:
- Intel and Microsoft: Although they compete in the market, Intel and Microsoft have a long history of coopetition. Microsoft’s Windows operating system runs on Intel’s processors, and both companies work together to develop new technologies and standards, such as USB.
- Samsung and Apple: Samsung and Apple are fierce competitors in the smartphone market, but Samsung also supplies components, such as displays and memory chips, to Apple for its iPhones.
- Airbnb and hotels: While Airbnb competes with hotels for customers, it also cooperates with them in various ways. Some hotels list rooms on Airbnb, and Airbnb offers a feature called “HotelTonight” that lets users book hotel rooms through its platform.
- Toyota and Tesla: Toyota and Tesla collaborated to develop electric vehicle technology, and Toyota invested in Tesla in 2010. However, they also compete in the electric vehicle market.
- Coca-Cola and PepsiCo: Coca-Cola and PepsiCo are arch-rivals in the soft drink market, but they also cooperate in various ways. For example, they work together on industry-wide initiatives, such as reducing the environmental impact of their products.
These are just a few examples of coopetition, but the concept can also be seen in many other industries.
Successful case study of coopetition
One successful case study of coopetition is the partnership between Apple and IBM, which began in 2014. Despite being competitors in the technology industry, the two companies collaborated to develop mobile applications for businesses using Apple’s iOS operating system and IBM’s cloud computing platform.
The partnership enabled Apple to expand its reach in the business market by leveraging IBM’s extensive salesforce and expertise in enterprise software. On the other hand, IBM was able to tap into the growing mobile market by developing applications for iOS devices.
Through their cooperation, the companies combined their respective strengths and resources to create a more compelling and competitive market offering than what they could have developed on their own. This collaboration resulted in a suite of mobile business applications, including customer service, finance, and supply chain management tools.
The partnership has been successful for both companies, with Apple and IBM reporting increased revenue and customer satisfaction. It has also enabled them to compete more effectively against other tech giants like Google and Microsoft.
Overall, the Apple-IBM partnership demonstrates how coopetition can be a successful strategy for businesses looking to collaborate with their competitors to achieve mutual benefits. By combining their respective strengths, they were able to create a new market offering that was more compelling and competitive than what they could have developed on their own.
