A competitor can be defined as “Any person or entity which is a rival against another. In business, a company in the same industry or a similar industry which offers a similar product or service.” (BusinessDictionary.com, n.d.). The word compete brings to mind some form of an enemy who is there to defeat you or to be defeated by you. In the business world, as we can see by BusinessDictionary.com’s definition above, it’s not a far stretch to come to the conclusion that competitors can be beneficial to both sides of the collaboration if they choose to be involved with one another.
Many companies, as with people, have different areas in which their talents shine. If we refer to Hamel, Doz and Prahalad (1988) they refer to General Motors buying cars and components from Korea’s Daewoo and Siemens buying computers from Fujitsu. Their article describes particularly the skill of the Japanese manufacturers with the American capability for distribution. Also, they go on to make quite a valid point, in fact these collaborations are, most of the time, complex outsource arrangements.
In the industry I am working in, there is a vast amount of collaboration between competitors, without which I don’t believe the industry would be able to produce the level of advanced systems that they are currently producing.
To put it in to terms of the web development industry, which is the industry I am involved in, I deal with competitors almost daily. If a client comes to me and wants an aesthetically pleasing extranet or intranet system for their company I will outsource the design to my outsource partners who, themselves also offer development services. Once the designs are mocked up I will then outsource the conversion of the design images in to xHTML with my front-end scripting partners and then I will do the system programming in-house. The same situation goes the other way, many of my clients are web development agencies that outsource the more complex programming requirements to myself.
The cohesion this brings to the industry is great, allowing all the different vendors deliver top class products without losing focus on their specific specialisations. In my past positions working for different companies, the benefits of this arrangement opposed to keeping full staff to cover all aspects of development and design is quite high. Unfortunately the high turnover rate when keeping staff and the budget required to employ all the different specialised staff full time is not always feasible.
We can see other examples of collaboration amongst mobile platform development companies. Particularly with Google’s introduction of Android Operating System which was predominantly released to HTC phones, but has now spread across to other manufacturers, including Samsung. Nokia have also recently (at the time of writing this article) made a controversial partnership with Microsoft to supply the operating systems for their phones and to scrap their own Symbian Operating System.
With the ever expanding software and hardware world the opportunities for outsourcing and mutually beneficial arrangements with competitors is growing. As we can see by reading Hamel, Doz and Prahalad’s 1988 paper, most of the partnerships are still happening today, which goes to show that a business should always consider their options with competitor partnerships.
References
BusinessDictionary.com (n.d.) Competitor definition [Online]. Available from: http://www.businessdictionary.com/definition/competitor.html (Accessed: 13 March 2011).
Hamel, G., Doz, Y. & Prahalad C. (1988) Collaborate with your competitors – and Win [Online] Harvard Business Review. Available from: http://www.stern.nyu.edu/mgt/courses/b2101/lamb/download/collaboratewith%20competitors.pdf (Accessed: 13 March 2011).