Collaboration strategy and competitive advantage
The globalization of the world economy, the rapid development of technologies, new opportunities in the promising markets of Asia, Latin America and Europe, the processes of deregulation and privatization in the new national economies create huge opportunities for strategic partnership policies and, on this basis, strengthening the competitiveness of companies. Currently, companies in all sectors of the economy and in all countries of the world are actively creating strategic alliances to strengthen competitiveness in domestic and foreign markets.
Many companies participate in global competition, which can be divided into two types: competition for the company’s presence in the national markets of different countries and the achievement of an advantageous competitive position among other global leaders there; and competition for new technologies and obtaining advantages in resources and entrepreneurial opportunities for successful competition in the future [28 p. XIII, XIV]. that the pursuit of both global leadership and a sustainable competitive position in the future requires more diverse in nature and extensive skills, resources, technologies and capabilities than they are able to create and implement on their own.
Strategic alliances and partnerships have become a basic element of modern business strategy. They are especially common in industries where the situation is changing rapidly. For example, General Electric has concluded over 100 cooperation agreements in various fields. IBM has more than 400 strategic partners [15 p.188]. Toyota has formed a network of long-term strategic alliances with component suppliers. Microsoft works closely with independent software vendors (ISVs) to create the next generation of Windows. Recent studies show that today a standard large corporation simultaneously participates in about 30 unions, in contrast to about three 10 years ago [15 pp.187–188].
Due to the proliferation of alliances and alliances in business, competition between individual enterprises is transformed into competition between groups of enterprises.
The competitive attractiveness of unions lies in the synergistic effect achieved by combining the competencies and resources of the participants.
Strategic alliances are cooperation agreements that go beyond the usual contracts between two companies, but do not extend to the merger of enterprises or the creation of a legally formalized joint venture. (Some strategic alliances, however, involve agreements on the acquisition by one or more participants of shares in the authorized capital of other participants). Such alliances are valuable, first of all, because they allow partners to eliminate the contradictions that arise between them, effectively interact for a long time and promptly respond to technological and competitive innovations, new trends in the market, changes in their own priorities and competitive situations. Competitive advantage arises when a company, through partnerships, acquires valuable resources and opportunities that it cannot otherwise obtain. Co-creating additional customer value requires deep relationships between partners, not just the exchange of ideas and information. If the partners do not consider each other’s resources and capabilities valuable and the partnership agreement does not produce mutually beneficial results, then the partnership will quickly end.
Most often, companies unite in strategic alliances for cooperation in the field of technology, creation of new products, elimination of gaps in technological or production skills and experience, joint formation of new competencies, increase sales efficiency, implementation of economies of scale in production or marketing, entering the market through joint marketing projects [42 p.66].
A company seeking leadership in a global market needs allies for those actions that are difficult to perform alone, for example:
rapid penetration of vital national markets and capacity-building for global market development; obtaining reliable information about an unfamiliar market and culture by creating alliances with local companies; obtaining valuable skills and competencies concentrated in certain geographical regions (for example, software development is concentrated in the USA, fashion modeling – in Italy, effective production organization – in Japan).
Industrial companies tend to form alliances with suppliers of materials and components in order to better manage supplies and accelerate the promotion of new products to the market. By joining forces in the production of components or assembly, companies are able to reduce production costs to a level unattainable with production volumes at each individual enterprise – Volvo, Renault and Peugeot created an alliance for the joint production of engines for trucks precisely because none of the companies needed so many engines to produce them independently [15 pp.187–188].
The partnership not only compensates for the weaknesses of the company and gives it new competitive advantages, but also increases the joint competitive pressure of partners on their common rivals while weakening competition among themselves. Potential competitors can be neutralized by turning them into partners.
Partnerships between individual companies affect the nature of competition in the industry. Many start-up companies, wishing to maintain their independence, prefer to enter into unions to merge with a larger company. They hope that cooperation with other companies will strengthen organizational capabilities, create new competitive resources and allow them to compete more efficiently. Industry leaders are interested in creating partnerships, because they expect to use them to prevail over the nearest competitors and find new attractive market opportunities.
Strategic cooperation is especially preferable in industries where technological development is very fast, simultaneously in many areas, and where a breakthrough in one technology affects other technologies (often even going beyond the boundaries of the industry). In the event that industries are experiencing rapid technological progress in several areas at the same time, the cooperation of companies allows them to maintain technological leadership and improve products. The companies jointly create new technologies and develop new products that are mutually complementary in the market, exchange the results of research and development, develop common dealer networks and distribution channels.
The duration and strength of alliances of companies depend primarily on the success of their joint activities, compliance with changing internal and external conditions and the willingness to adjust the initial conditions if necessary. If each of the participants believes that the value of the experience, resources and competencies received from the partner is low, and the results of joint activities have not become beneficial for all partners, then the union will disintegrate. A recent study by Andersen Consulting showed that over 60% of all unions broke up or did not give the desired effect [27 p.110]. Most unions break up, a few exist for a long time. The fragility of the unions is explained, in particular, by the divergence in the goals and priorities of the participants, the inability to organize effective interaction, the emergence of more attractive ways of technology development, and competition between participants.