Is Business Collaboration, Rather than Market Competition, Becoming the Key to Success - Essay Example

Is business collaboration, rather than market competition, becoming the key to success? TABLE OF CONTENTS TABLE OF CONTENTS 2 Introduction 3 Discussion 4 Conclusion 6 Reference List 8 Introduction According to (Yoshino and Srinivasa, 1995), collaboration is a strategic alliance between two or more than two company with the goal of gathering mutual benefits for both the company. Increasing global competition in response to delivering efficient service to the customers has forced most of the business firm to adopt multi firm network collaboration technique. Collaboration is basically working together in order to maximise profit, minimise risk, exchange of information and gain mutual benefits. However, effectiveness of such benefits differs according to degree and importance among the collaborative firm. Townsend and Shelley (2008) opined that, competition and collaboration exists in a business side by side and provides interdepartmental competition within the collaborative organizations. In many times it has been proven that, collaboration with the rival firms creates stronger business even with apparent competitor. In the current business scenario, getting away from the competition is quite tough. A business cannot resist itself from entering into a market competition. But collaboration is more active to inject aviation and fitness within an industry, more importantly in providing better experience to the customer. Organizations those are not able to form collaboration, are not much effective to encourage innovation towards the business growth and strategic capabilities. As businesses are becoming more close to the global world, collaboration is becoming increasingly important to ensure long term existence. The two industries where business collaboration can be experienced and observed in plenty are the IT industry and the Automobile industry. Collaboration among the IT industries has resulted to deliver IT based solution that are more flexible and tailored to meet changing business and customer’s needs. Examples of collaboration in IT sectors are Microsoft to Nokia, Google to Motorola etc. On the other hand, focusing on the collaboration technique, Auto mobile industries also gained high production capacity and margin to the high volume. Some major collaboration that already has taken place in automobile industry is general motor to PSU, Tata to Jaguar etc. Discussion Undoubtedly, collaborative strategy and dynamic is more effective in comparison to competition to provide innovation and business growth. Collaboration is more appropriate to competition in creating better future for a business. Ring et al. (1994) opted that, global competition may send a business to the outer space from the industry, but collaboration among the firm may ensure their existence within the same industry in productive way. Competition is good to continue business process in innovative way. But, part of the innovative business spirit comes with achieving efficient and better collaboration. Gradually the benefits of collaboration are becoming obvious among the organizations to sustain long term existence. Collaboration among the organization ensures mutual benefits for both business and customers. Borsch (1994) pointed out that, collaboration among the firm is effective to eliminate bullwhip effects on the supply chain network and reduce uncertainties through shading of information. Automobile companies like, Toyota, Ford Motor, Nisson, General Motor, Volvo, Honda etc. are using VMI (Vendor Management Inventory) process to eliminate bullwhip effects. Further, companies in IT sector also use collaboration planning to promote sharing of information and reduce bullwhip effects. In order to make positive contribution to the society and provide high quality service to the customer, it is very important to implement the spirit of collaboration and share business policies with the business partner. In this context, example of Toyota’s business policy can be stated here. In order to raise customer satisfaction and improve their business quality in terms of safety and organizational value, Toyota has increased its collaboration with dealers, suppliers and business partner. In good or bad time, Toyota and its business partners face same issue together and make mutual support to the business growth. The global purchasing activities of Toyota is highly supported by close collaboration revolve with its business partners and suppliers. On the other hand, the worldwide leader Microsoft and world’s large smart phone manufacturer Nokia also has enter into a strategic alliance to deliver enterprise grade and groundbreaking solution to the mobile productivity. These two companies collaborate with each other to deliver well designed developed and productive solution to the Microsoft business communication and Microsoft Office Mobile (Microsoft 2014). Further, collaboration between Google and Motorola is also an important example in relation to the present discussion. During the year 1998 due to advent of smartphones, Motorola was straggled in the market to compete with the companies like Apple. In this time, Google was invested $12.5 billion to make a significant restructure in Motorola (Trustedreviews 2014). Thus, collaboration technique helps to contribute mutual and sustainable growth to the business as well as to the society. Jamison (1998) suggested that, collaboration allows a company to deliver expected customer value and minimize transaction cost. A single supply chain is not much effective to fulfil all the business requirements in an efficient manner. Business collaboration allows in reducing the production cost and thereby, deliver product to the customer at reasonable price. Thus, collaboration is a way to gain competitive advantage in the market. But success of collaboration strategy depends on mutual trust and confidence among the business partners. Collaborative relationship among the business partners ensures mutual benefits among the business partner. However, Simonin (1999) argued that, collaboration among the business partner can fain due to several reasons, such as lack of willingness to take risk, desire to increase individual income, when approaches differ among the member, lack of commitment etc. Within a collaborative relationship, if partners think that they are not getting enough compensation to continue the business relationship, they can simultaneously break the business relationship. Strategic alliance between Nissan and Renault has failed due to the same reason. Renault has formed strategic alliance with Nissan to form more successful business in an automobile industry and sell cars worldwide. But, Nissan has failed to stand with Renault’s expectation (for having different market approach for both the company) and the increasing risk of failure of the joint project has weakened their strategic alliance. In spite of having several advantages of collaboration technique, competition lasso has positive impact on the business growth (Lin and Richard 1998). In absence of market competition, business organization not gets enough inspiration to boost its productivity and international competitiveness to promote business dynamic and economic growth. If business collaboration fails, market competition is only factor that instigate business growth and competitiveness. Companies those are faces huge market competition are continually tried to become more productive and efficient (Lavie1 et al. 2012). With constant high pressure, firms continually try to find ways to reduce costs to gain competitive advantage. For example, competitive and price sensitive market helps Vodafone to enhance its value through adopting reliable pricing strategy and customer’s value. Thus, market competition is also effective enough in fostering dynamic markets and stimulates business growth. Conclusion The current essay has focused on analysing the significance of collaboration over the market competition to ensure business growth. By conducting the entire study, it has been found that both collaboration and competition are effective technique to certify business growth, but the one which is more accurate depends on the situation. If collaboration among the business partner forms with fear, suspicion and mistrust, it might not work in long period. In this situation, it is better for the companies to compete with each other rather than forming a collaborative business relationship. At the same time, if there is goodwill and mutual trust among the business partner, collaboration is more effective than competition to ensure business growth. Thus, to manage business growth successfully, business organization needs to understand the business requirements and adopt marketing strategy according to that. Reference List Borsch, O., 2004. The Process of Relational Contracting: Developing Trust-Based Strategic Alliances Among Small Business Enterprises. Advances in Strategic Management, 10, pp.113-136. Jamison, M.A., 1998. Emerging Patterns in Global Telecommunications Alliances and Mergers. Industrial and Corporate Change, 7, pp.695-713. Lavie1, D., Haunschild, P. R. and Khanna, P., 2012. Organizational differences, relational mechanisms, and alliance performance. Strategic Management Journal, 33(13), pp.1453–1479 Lin X. and Richard G., 1998. Sustaining Satisfactory Joint Venture Relationships: The Role of Conflict Resolution Strategy. Journal of International Business Studies, 29, pp.179-96. Microsoft, 2014. Microsoft and Nokia Form Global Alliance to Design, Develop and Market Mobile Productivity Solutions. [online] Available at: [Accessed 8 October 2014] Ring, P., Peter S. and Andrew H.V., 1994. Developmental Processes of Cooperative Inter organizational Relationships. Academy of Management Journal, 19, pp.90-118. Simonin, B., 1999. Ambiguity and the Process of Knowledge Transfer in Strategic Alliances. Strategic Management Journal, 20(7), pp.595-623. Townsend, A., and Shelley, K., 2008. Validating an instrument for assessing workforce collaboration. Community College Journal of Research and Practice, 32, pp.101-112. Trustedreviews, 2014. Google inspires Motorola to “dream again, Available at: [Accessed 8 October 2014] Yoshino, M.Y. and Srinivasa U.R., 1995. Strategic Alliances: An Entrepreneurial Approach to Globalization. Cambridge, MA: Harvard University Press. Read More