While competition is important and unavoidable, cooperation can sometimes be profitable. Cooperative moves may allow organizations to enjoy better success that might be unreachable otherwise. Cooperation enables organizations to share the resources and to benefit from each other’s strengths. Cooperative organizations take on risks, including losing control over operations, possible secret leaks, and allowing partners to take advantages.
A joint venture is a cooperative and special arrangement between two organizations that involves each contributing to the building up of a new entity. Joint venture partners share decision-making authority, operation control, and profits of the joint venture. Usually, two organizations enter a joint venture to benefit from an opportunity.
In some cases, a joint venture is designed to counter a shared threat. SABMiller and Molson Coors Brewing Company created a joint venture called MillerCoors that combines their beer operations in the United States to better compete against their monstrous rival, Anheuser-Busch.
Strategic alliance is like a joint venture but it does not create a new entity. It is a cooperative arrangement between two or more organizations. Twitter and Yahoo! Japan’s strategic alliance lets the two collaborate as opposed to creating a new entity together.
Collocation is the offering of goods and services under different brands that are located close to one another. Theatres and art galleries often get clustered together in one neighborhood. Customers get a variety of choices in case of collocation. Moreover, a set of collocated organizations can attract a bigger customer base collectively than the added sum of individual locations.
Co-opetition is a new concept. Ray Noorda, Novell’s founder, coined the term to refer to a blending of competition and cooperation between two organizations. The concept of coopetition highlights a complex interaction of the two different situations and it is becoming increasingly popular in many industries.
NEC (a Japanese electronics company) has three different relationships with Hewlett-Packard Co.: customer, supplier, and competitor. NEC and Hewlett-Packard are often termed to be in a relationship described as “frienemies” − part friends and part enemies.
It is easy to become confused by the overwhelming sets of competitive and cooperative moves available. As most of the industries get fast-paced, hesitation can lead to disaster. Sometimes, competition gets transformed into hyper-competition, requiring very rapid and unpredictable moves that can undermine the competitive advantages. Therefore, it is often better to react quickly rather than waiting to take a step after long-timed analysis and hesitation to shake hands.