Service Strategy – Part 2

Competition and Co-operation

The basic assumption in Strategy is competition.  We create strategies to improve our overall performance and because we are in competitive situations or could be in the future.

Competitive activity has a number of levels.  It ranges from an extreme of “all out war” to détente and co-operation with our opponents in order to improve our performance and results.  Success may be better achieved not only by building relationships and alliances, with customers, suppliers and those who can facilitate our activities, but through better competition with our competitors.

1.  Competitive market behaviour

Competitive behaviour sees organisations taking an adversarial role in all exchange situations, not only with competitors in the market but also in dealings with stakeholders such as suppliers.  The primary objective is to drive the hardest bargain in all situations.  This is what is referred to as a zero sum game – an interaction in which one participant’s gains result only from another’s equivalent losses. Such competitive market behaviour ranges from fair competition (playing by the rules and “accepted behaviour”) through negative opportunism, to predatory behaviour (illegal).

2.  Monopolistic/Oligopolistic market behaviour

Some organisations seek to operate in a monopolistic way, seeking to exclude or severely limit competition via government policies and regulations or through totally proprietary (patented) technology.  The problem with building a defensive wall is that one loses the benefits of competition – improved performance.

3.  Co-operative market behaviour

Co-operative behaviour is characterised by organisations exhibiting behaviour that focuses primarily on co-operation with market supporters – (strategic relationship building to leverage collaborative efforts.   By working together, they can jointly create a superior offer to customers) and less on competitive behaviours towards competitors.

Lesser (Non-competitive) market behaviour ranges from:

An intention not to engage in overtly competitive activities due to a desire not to disturb the status quo.

Détente – A mutual deep interest and understanding, not to act competitively.   In many instances competitors believe that it is not in their interests, the interests of society, or customers to act competitively due a belief that that competitors (e.g. charities, public institutions) are doing the same job.

Collusive behaviour – Organisations who conspire and engage in anti competitive behaviour.

4.  Syncretic market behaviour

Syncretic (a combination of different beliefs) market behaviour is the attempt to achieve a dynamic balance between positives to be found in both competitive and co-operative strategies.  The objective is to enhance the competitive position of the organisation by Behaving in a mutually beneficial way with competitors, though sharing information and/or base technology.  The objective is to still actively compete for market share, whilst co-operating a way that builds a bigger market overall – a positive sum game.  This aims to reduce the costs and risks associated with duplication of effort.

The aim is to share basic technologies and capabilities that would be too costly and risky to independently develop and thus reduce costs and improve performance.  This is seen to also benefit customers.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s