Are Vertical Integration and Coopetition based business model related?

Coopetition (Cooperation + Competition) has been an aggressively researched topic in the recent past. I was introduced to this term only during my studies at HEC Paris and while I read this interesting article – ‘Coopetition based business models‘ it brought a few more thoughts to my mind.

This piece on strategy-business.com puts forth various perspectives about Coopetition based business models. It raises valid points about organizational resistance and subsequent benefits of pulling through the strategy – not only to the firm but also possibly to the industry as a whole. It presents the potential impact of effecting an increase in the size of the whole pie, thereby dramatically increasing the firm’s own share.  In Amazon’s case, my interpretation is that while Amazon entered the e-commerce space as a consumer-goods-provider, it soon transformed itself primarily into a platform-provider – cleverly shifting its position within the industry value chain.

While reading this article, I couldn’t help but think of two more examples. One – from my not-so-distant past and the other from my current day experience.

In the Smartphone industry, Samsung & Apple are fierce competitors. Despite this fact, Samsung still makes the 64-bit A7 processor for the Apple iPhones (See here). Their partnership extended to more areas than just the processor.

In the Flat TV Industry, Samsung is a clear global leader in market share. Yet, notably Samsung is a major supplier of flat panel displays to several other TV makers in the industry. (See here)

In the consumer electronics industry, known for its rapid pace of innovation, is this a conscious strategic decision? Do vertically integrated corporations have an inherent competitive advantage over others in the industry value chain?

On the one hand, evolving customer specifications are a definite source of competitive intelligence for the firm – gaining insights on industry trend evolution. On the other hand, being suppliers of ‘critical components’ of a product gives the firm a higher bargaining power – allowing some control on the supply chain within the industry and also impacting product portfolio planning.

Read the original research ‘Coopetition based business models‘ via http://Strategy-Business.com

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