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Why partnering with your competitor makes good business sense

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Co-opetition is a risky but potentially rewarding endeavor. It is essential to look at weighing the risks against the benefits before entering into a cooperative partnership.

The pork industry is a competitive business, yet the challenges we have in front of us is at the community level. It takes a healthy U.S. swine herd and global competitive advantage to sell more pork worldwide.

The late Bob Morrison stressed working toward the common good rather than the good for the individual. He believed in working together for greater good, and even better pork industry.

“Straight competition will not get us there, neither will pure cooperation,” states John Deen, DVM, University of Minnesota College of Veterinary Medicine, speaking at the 2017 Allen D. Leman Swine Conference. “We lose too much.”

It starts with a middle ground called Co-opetition — the balance between cooperation and competition. 

As a business, we strive for survival and sustainable growth. This is where competition kicks in, explains Rebecca Liu, director of joint marketing programs at Lancaster University.

Competition is beneficial, and it drives innovation. However, it is useful for the business and the pork industry only to a certain point.  Often we get so busy competing that we miss business opportunities. “We can achieve anything by cooperation. You can achieve any goal and any vision by tapping into other’s resources, and other’s expertizes,” stresses Liu.

She further explains when cooperation works well, it inspires you to push your limits and accomplish things you once thought were impossible. 

A collaborative effort can have many benefits: access to resources, facilitates learning and gain know-how, share risks and uncertainties and turn win-lose projector toward win-win situation

Still, cooperating with your competitors can be tricky. It takes business smarts, and the motivation must be pure.

Liu says over 50% of strategic alliances occur between firms within the same industry or among competitors.

Co-opetition is a risky but potentially rewarding endeavor. It is essential to look at weighing the risks against the benefits before entering into a cooperative partnership.

Why work with my competitor?

  • To share relevant resources
  • Create common technologies
  • Develop a uniform voice in the marketplace
  • A chance to expand markets, especially globally

Why not partner with my competitor?

  • Risk of know-how leaking
  • Requires more management skills to coordinate challenges
  • Issues of trust, commitment, and opportunism
  • Loss of control
  • Value appropriation concerns

In other industries, some firms reap bigger benefits from co-opetition than others. A collaborative effort works well if both companies comprise of two elements — absorptive capacity and appropriability regime. Absorptive capacity is a firm’s ability to recognize the value of new, external information and the ability to apply it while at the same time protecting the company from imitation.

Overall, Liu says co-opetition works well for sales and marketing. For research and development, cooperation does not benefit companies conducting radical innovations.

In conclusion, Liu says it is important to be more open to co-opetition to move the pork industry forward.

TAGS: Marketing
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