Strategy management : Competition and cooperation in the Network level strategy

Résumé du document

According to Bob De Wit and Ron Meyer, global strategy can be divided in three parts: process, content and context. These can be recognized in all business situations in relation to managers. The strategy process is defined as a set of essential questions about the business as a whole. In these three dimensions, there appear some tensions between apparent opposites. We will focus our attention on the strategy content and will try to explain the strategy tension between competition and cooperation in the Network level strategy.

Companies and their units work at different levels and in different markets. It is possible that the group of companies can have a strategy together. The strategy doesn't just imply the company itself but also all units that build the environment in which company is operating. That represents a business network. The question for the manager of the firm is to well define the relationship with other firms. Is it more interesting to develop a strong work relation with one firm or to keep far from it? In order to answer this question, it is necessary to work on inter-organizational relationships.

The issue of inter-organizational relationships:
Whatever the products or the market are, companies have to work with others, they interact with organizations. It's defined in four parts.

Extraits

[...] They are competitors. And finaly he industry outsider relations (indirect horizontal) includes the firms that produce complementary products (e.g. tyre industry with car industry or mobile phone industry with communication network companies). The macro environment includes social cultural actors such as media or community group, economic actors (banks, unions political actors such as government and political parties and international institution, and finally technological actors as research institutes. The second one relation is the relational objectives that show how the firms are sharing their skills in order to have more value added and to reap synergy. [...]

[...] So, for managers, the problem of competition and cooperation is far from being resolved. They have to cooperate or compete with other firms in order to reach their goals, to simplify some process and also to satisfy at the maximum their customers or other part of the relational actors. Managers well know who are their enemies or friends but sometimes work with both. Cooperation leads to better results for the company and create added value although competition enhance the firm's position and strategy in order to be more competitive on a strong market. [...]

[...] For example, highly competitive behaviours are witness when the companies deal with the same suppliers (upstream vertical relation) or when two companies offers the same products on a specific market and fight in order to find the better outlet (direct horizontal). To be competitive, a company have to overcome conflicts and rivals. It has not to be dependent of its competitors. The demand for inter-organizational cooperation Cooperation is a way to work together with others where the goal of the organizations are mutually beneficial. As seen above, cooperation is a good way to share way of working and gain others resources and give to the market or clients better outcomes. [...]

[...] Meyer (2005), 2nd edition., Strategy Synthesis: Resolving Strategy Paradoxes to Create Competitive Advantage, Thomson Learning, London. Hill, C. and G. Jones (2008), 8th edition., Strategic Management: An Integrated Approach, Houghton Mifflin Company, Boston. Hooley, G., J. Saunders and N. Piercy (2004), 3rd edition., Marketing Strategy and Competitive Positioning, Pearson Education, London. [...]

[...] We will focus our attention on the strategy content and will try to explain the strategy tension between competition and cooperation in the Network level strategy. Companies and its units use to work at different level and in different markets. It is possible that the group of companies can have a strategy together. The strategy doesn't just imply the company itself but also all units that build the environment in which company is operating. That represents a business network. The question for the manager of the firm is to well define the relationship with others firms. [...]