Overview[ edit ] Coopetition or co-opetition is a neologism coined to describe the concept of cooperation between competitors. Coopetition is a portmanteau of cooperation and competition. The text discusses at length the notion of coopetition, a business strategy gained from game theory to demonstrate when it is better for competitors to work together rather than to go up against one another in contest. The authors use many examples to show the simultaneous interplay between competition and cooperation.
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The model uses insights from game theory to understand and influence the behaviour of these players. Based on case studies across different industries, they argued that cooperation and competition are both necessary and desirable when doing business.
Cooperation is required to increase benefits to all players focus on market growth , and competition is needed to divide the existing benefits among these players focus on market share. Game theory provided the economic foundation to determine circumstances when cooperation is the preferential strategy. Game theory studies how interactions between players and the choices each player makes lead to different outcomes or end states of the game. The objective to develop advantageous strategies provides insights for strategic management.
The theory, developed in by Von Neumann and Morgenstern, has found application in other fields such as politics, economics, ethics and the military. They identified four types of players that every company faces: 1.
In return, money goes from the customers to the company. In return, money goes from the company to the suppliers.
Substitutes can be both direct, e. When the market increases, suppliers begin to tailor their offering and make the purchasing efforts easier on all acquiring firms. Importantly, a single player can have more than one role simultaneously. A player can even be both competitor and complementor at the same time. Competitors Sony and Philips acted as complementors in the joint development of a standard for the Compact Disc.
Brandenburger and Nalebuff continued by describing the PARTS of a business strategy -- five dimensions a company can use to identify strategies that change the game, the companies business, to its own advantage. Players The Value Net can be used to identify and categorize the current players in the game. Rules In every business, many written and unwritten rules apply. Although many rules cannot be changed due to governmental enforcement, contracts provide opportunities to change the rules on a smaller scale.
It is necessary, however, to be aware of these perceptions in order to be able to influence them. Scope Often, a game is not isolated, but linked to other games via its players. A firm can extend its business to other games when it adds value to the other game and increases its profitability.
On the other hand, a firm can deliberately keep two games separate when linking the games would cannibalize its traditional business. Linking and de-linking games can occur by recognizing complementary markets, by special clauses in contracts or by influencing the perception of other players. Its main academic contribution is the identification and justification of the role that complementors play.
Business is more than competing for market share in the current market.
Description Successful business strategy means actively shaping the game you play, not just shaping the game you find. Managers can benefit by using the insights from game theory to design a game that is right for their companies. The rewards that can come from changing a game may be far greater than those from maintaining the status quo. Sometimes the best way to succeed is to let others be successful. Including your competitors. To encourage thinking about both cooperative and competitive ways to change the game, Adam Brandenburger and Barry Nalebuff suggest the term Co-opetition.
Is your business an elephant or a tiger? The tiger, with no natural predators, keeps the populations of deer, wild pig, sambar, and gaur in check. But it hunts alone. To a tiger, everything else is either prey or something to be avoided.
"Co-opetition" by Adam M. Brandenburger and Barry J. Nalebuff
The model uses insights from game theory to understand and influence the behaviour of these players. Based on case studies across different industries, they argued that cooperation and competition are both necessary and desirable when doing business. Cooperation is required to increase benefits to all players focus on market growth , and competition is needed to divide the existing benefits among these players focus on market share. Game theory provided the economic foundation to determine circumstances when cooperation is the preferential strategy.
The Value Net Model