IT and Network Organization Co-opetition and co-production

IT and Network Organization IT and Network Organization IT and Network Organization IT and Network Organization

Co-opetition

and co-production


• Advantages of external collaboration

• Cooperative Competition

• Co-production and Strategic Alliances

• Value Chain to Identify potential co-production

Topics


Advantages of external collaboration

IT and Network Organization IT and Network Organization

• Technologies have created new modes of production and innovation that enable and encourage a greater degree of participation and collaboration.

• Aim of co-production and co-creation is to enhance organisational knowledge processes by involving, suppliers, partners, competitors, customers in the creation of meaning and value.

• On the consumer level, co-creation transforms the consumer into an active partner for the creation of future value.


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The search for collaborative advantage

• Seek out opportunities for horizontal as well as vertical collaboration

• Co-operate to grow the cake, compete on how to slice it

• Leveraging capabilities and knowledge through collaboration

• Share assets in the supply chain where appropriate


Accessing Capabilities through Collaborative Partnerships

Outsource the function requiring the capabilities to a key supplier or another provider

Collaborate with a firm that has complementary resources and

capabilities

Engage in a collaborative

partnership for the purpose of learning

how the partner does things

Approaches to acquiring capabilities from an external source

IT and Network Organization IT and Network Organization Facilitating Collaboration with External Partners

and Strategic Allies

Strategic alliances

Outsourcing arrangements

Joint ventures

Cooperative partnerships

Creating aNetwork

Structure:Using

“relationship managers” to build and

maintain cooperative

arrangements of value both

parties


Cite four types of Collaboration with External Partners ?

Question


Cooperative Competition


Co-opetition: a definition

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A business strategy based on a combination of cooperation and competition, derived from an understanding that business competitors can benefit when they work together.

A “non zero sum” scenario, in which the sum of what is gained by all players is greater than the combined sum of what the players entered the scenario with.


Co-opetition occurs when companies work together in parts of their business where they do not believe they have competitive advantage and where they believe they can share common costs.

Basic premise:-Co-opetition strategy and value creation leverage the alliance-Partner with other shippers (even competitors) to control logistics and transport costs-Load consolidation

Cooperative Competition


Co-opetition Partners

• Producers, Customers, Consumers who drive producer demand and determine product eco-footprint

• Shippers and Terminal Operators who generate the freight flows and provide the critical infrastructure for product flow

• Logistic Service Partners (3PLs) who can design and implement optimised solutions and move the freight

• Fourth Party Providers who can facilitate partnerships, referee blockages, find common ground

• Governments who can assure that legal and regulatory arrangements are in place to support seamless collaboration


Co-opetition = Value Creation

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Source: D. Meyer, 15th March 2011, and reubenmiller.typepad.com

• Co-opetition does not simply emerge from coupling competition and cooperation issues

• Co-opetition implies that cooperation and competition merge together to form a new kind of strategic interdependence between firms, giving rise to a co-opetitive system of reciprocal value creation.



The supply chain of the future

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Yesterday’s Model

• Independent entities

• Inventory Based

• Low cost production

Market Driven

Supplier Driven

Mass customisation

one-to-one marketing

Mass production

Tomorrow’s Model

• Virtual networks

• Information based

• Customer value oriented

mass marketing


What is a system of reciprocal value creation?

Question


Co-production and Strategic Alliances


Strategic Alliances• A strategic alliance is when two or more firms

share resources and activities to pursue a strategy.

• They vary from simple two partner alliances coproducing a product to one with multiple partners providing complex products and solutions.


Strategic Alliances: Motives for• A frequent reason for alliances is to obtain

resources that an organization needs but does not possess itself. The objective is to gain competitive advantage.


Strategic Alliances: Motives for• Two motives for such alliances are:

1.The need for critical mass – leads to cost reduction and/or improved customer offering.

2.Co-specialization – for example entering a new geographic market where the firm needs local knowledge, and the local firm requires expertise in distribution and marketing.


Strategic Alliances: Example

Fiat and Mazda team up to build roadster•Fiat and Mazda, long time rivals in the market for small, relatively affordable sports cars, plan to join forces to manufacture a new two-seater roadster in Japan, in a deal that could usher in a wider-ranging global alliance.

•The automakers said that they had reached a tentative agreement to design and build the rear-wheel-drive vehicle beginning in 2015. The Fiat version would be sold by Alfa Romeo, the sports car marque that the Italian group wants to reintroduce in the US and launch in China.

•The deal, which the carmakers said they hope to finalise by the end of the year, extends a trend towards manufacturing alliances in the industry, as firms seek to share the rising cost of developing new models and recoup their investments more quickly through increased production volume.

Source: Financial Times, May 23, 2012, Jonathan Soble and Eric Sylvers


Why are the main motives behind the strategic alliances?

Question


Value Chain to Identify potential co-production


What is Value Chain?

• Represents how a business creates customer value by examining contributions of different internal activities to that value

• Divides a business into a set of activities within the business– Starts with inputs a firm receives

– Finishes with firm’s products or services and after-sales service to customers

• Allows for better identification of a firm’s strengths and weaknesses since the business is viewed as a process


Porter’s value chain.

Inboundlogistics

Productionprocesses

Outboundlogistics

Sales andmarketing

Customerservice

Information technology infrastructure

Upstream Downstream

The key to intra-business e-commerce is improving value chain efficiency.


Value Network• Set of inter-organizational links and relationships that

are necessary to create and sell a product or service.

Supplier Channel

BuyerFIRM


The Value Chain

– The value chain is the string of activities that moves a product from the raw material stage, through manufacturing and distribution, and ultimately to the end user.

– By studying a product’s or service’s value chain, an organization can identify ways to create additional value and assess whether it has the means to do so.

– Value chain analysis is also helpful in identifying opportunities for new businesses and in understanding how business models emerge.

Supply chainNew vehicle development

AftermarketDistribution Channel

The basic value chain for new vehicles

Value Network


Supplies of steel

& alum

inum

Service &

technical support

Sales

Distribution

Inventory holding

Manufacturing

Design E

ngineering

Inventory holding

Purchasing

Distribution

Marketing

Canning

Processing

Inventory holding

Purchasing

1

2 4

53

Identifying collaboration Opportunities through Linking the Value Chains of the Firm and its partners:





Supplies of steel

& alum

inum

Service &

technical support

Sales

Distribution

Inventory holding

Manufacturing

Design E

ngineering

Inventory holding

Purchasing

Distribution

Marketing

Canning

Processing

Inventory holding

Purchasing

1

2 4

53


Example

1. Value chain for a traditional furniture manufacturer. [All or most steps completed by the same company]

PartsDesignShip and

warehouseAssembly

Sell – retail or

catalogueDelivery


ExampleIKEA value chain.

Parts

DesignShip and

warehouse

Assembly

Sell – retail or

catalogue

Delivery

Outsource to contract mfg.

Outsource to customer Outsource to

customer

3. IKEA advantages: no manufacturing, assembly or delivery facilities = cost savings . Focus instead on core competencies: design, purchasing, and distribution that give it a competitive advantage.

The IKEA vision is to create a better everyday life for people. We make this possible by offering a wide range of well –designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.

The IKEA vision is to create a better everyday life for people. We make this possible by offering a wide range of well –designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.


What are the main differences between a Value Chain and a value network?

Question

Documents

IT and Network Organization Co-opetition and co-production