Coopetition is a strategy in business in which ‘competition’ and ‘cooperation’ are combined and the benefits offered by the two are harnessed. When two companies that are known to be competitors collaborate with each other with the expectation of mutual benefits, coopetition has occurred. Coopetition often occur in the business sector, it happens when companies that are formally competitors come together to enjoy mutual benefits.
A Little More on What is Coopetition
Coopetition involves two companies forming an alliance to engage in businesses for the benefit of both parties. Coopetition is common among companies that offer complementary products, for instance, a company manufacturing cookies and a company making ice-cream or coffee can engage in competition. This business strategy is the combination of competition and cooperation to form a single business idea that stimulates growth. Coopetition can also occur between two companies that offer similar products, such as technological software that are complementary.
Coopetition brings about the business synergy between two competing companies, this tactic facilitates the expansion of businesses and the industry at large.
The Coopetition Model
In business, coopetition is a model that draws insight from a gaming theory in which competitors in a game form an alliance to achieve the same purpose. Coopetition models involve the use of certain statistics that map out the shares and losses of parties involved in the alliance. When two companies engage in coopetition, there must be an agreement that states what is expected of each party to achieve mutual benefits.
The idea of coopetition was introduced by Adam M. Brandenburger and Barry J. Nalebuf, who are professors from Havard and Yale respectively. The coopetitiona model had the shape of a diamond where customers, suppliers, competitors and complementors were pitched in different corners of the diamond. In this business model, all these forces begin to cooperate, rather than competite and each party will achieve their goals.
Reasons Why Companies Conduct Coopetition
Aside from the business sector, coopetition is common in the technology industry. Companies collaborate for different reasons, the major ones are;
- Coopetition enhance synergy between companies in which ecah of them gain benefits and achieve their business goals.
- Coopetition aid expansion of the businesses involved and the entire industry.
- Coopetion is formed by companies who share common gains and have similar objectives in order to achieve their goals faster.
Through, coopetition, it is possible for two companies to merge to form a greater business force.