Sleeping with Enemy: Doing Business with a Competitor

SLEEPING WITH THE ENEMY: Doing Business with a Competitor

Author: Barbara A. Carlin, Michael J. Dowling, William D. Roering, John Wyman, John Kalinoglou and Greg

Clyburn

Anthony Kojo Ayivi

Sajeewani Ponnamperuma Arachchige

Forming relationship with a competitor

•Multifaceted relationships

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… With Enemy

Technology: Only supplier of specific parts Regulation Legal Requirement

Globalization: do business in other countries

Size and Structure: - More Diversification leads to different market

Outsourcing -increasing trend of outsourcing

Products: More opportunities with linkages

Driving Forces: Why Do Business with Enemy

Firm’s image: Improves doing business with market Leader

Why important? : Rewards and Risks

• Relationships with suppliers/ customers give benefits in business

• Sharing information with them without being endangering its competitive position is very important

• It has became an increasingly important issue in global business

BUT must be managed well because of ….

• Some drawbacks– risk of giving information

– risk of crossing the line between cagey negotiations and unethical behaviors

– Difficult to justify the cost of centralizing management

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Types of Multifaceted Relationships

1. Buyer-Supplier in Direct Competition Eg: IBM and Intel

Firm A Intel

(supplier)

Firm B IBM

(Buyer)

ProductSuper

computers

ProductSuper

computers

Microprocessors

Competition in the Market

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Types of Multifaceted Relationships

2. Partners in Competition

Eg: IBM and Apple

Firm A IBM

Firm B Apple

ProductPersonal

computers

ProductPersonal

computers

Joint venture to create New PC Operating System

Competition in the Market

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Types of Multifaceted Relationships

3. Buyer-Supplier in Indirect Competition

Eg: Microsoft and Apple

Legal Microsoft

defending lawsuit

Legal Apple suing Microsoft

Firm AMicrosoft (Supplier)

Firm BApple

(Buyer)

Competition in Legal Arena

Competition in the Market

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How to Manage Multifaceted Relationships

Management strategies ranging from complete avoidance to total involvement

1. Stay away or get out: costly

2. Divide and conquer: separating interactions with competitor– having different departments or divisions

– using product or geographic divisions by large companies

– Can behave as there is no relationship

Best strategy for companies engaged unwillingly in relationships or cultures and leadership emphasize competition rather than collaboration

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How to Manage Multifaceted Relationships

3. Centralize Intelligence– increase benefits of multifaceted relationship

– manage risk of coordination

– combine information to see what can be learned:

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Sources Story: BellSouth Corporation

Moved from: Traditional approach - Decentralized

To: Centralized Approach

• Enhanced Information sharing and

• Helped improve overall business effectiveness and Efficiency

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Conclusion

• All firms should launch multifaceted relationships– Efficient, high quality supply or best prices

– Improve decision making

Companies with tolerance of risk, culture of understanding collaboration, corporate strategy of emphasizing new opportunities flexible leadership will be successful in centralizing information

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References

Dawling, M. J., Carlin, B. A., Roering, W. D., Wyman, J., Kalinoglou, J., & Clyburn, G. (1994). Sleeping with the Enemy: Doing Business with a Competitor. Business Horizon , 37 (5), 9-15.

Turban, E., Sharda, R., Delen, D., & King, D. (2011). Business Intelligence: A Managerial Approach (International Edition ed.). New Jersey, USA: Person Education Inc.

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