Co-opetition in Supply Chains. The Cases of Three Large Market Leader Companies
Supply Chain Management (SCM) has become an integral part of strategy for all organizations irrespective of their size and sector in the present globalized and networked economy. The vast bulk of literature in supply chain management focuses, implicitly, on the vertical flow of products from source to the final consumer. The flow of products through the supply chain is a natural and important focus as it satisfies the customer requirements. However, the neglect of the horizontal dimension of the supply chain has been neglected, despite the potential for valuable contributions from coordination along this dimension. This study is on analyzing implementation of horizontal integration or co-opetition. Co-opetition combines the advantages of both competition and cooperation into a new dynamic which can be used to not only generate more profits but also to change the nature of the business environment in the company’s favour and it occurs when companies interact with partial congruence of interests. Companies cooperate with each other to reach a higher value creation if compared to the value created without interaction, and struggle to achieve competitive advantage, originating a balance between a cooperative and a competitive interaction among the same firms, so that neither one of the two ways of conduct will harm the other is a strategic challenge or dilemma for many firms. The aim of this paper is to analyze practical examples of co-opetition in the grocery and automotive industry. This study contributes to identify three basic forms of co-opetition:
• Centralized purchasing
• Private labels
All forms are characterized by:
• Agreement among partners.
• Application of win-win strategy.
• Products sold by partner are equal or with minimal changes (brand in case on rebadging and label in case of private label).
• Companies compete for market-share of their products. Products reach the same market, so products are competitors in front of consumers.
• Information technology is not a priority in the co-opetition.
This paper contributes to the supply chain management literature. This paper helps both academics and managers to gain a better understanding of the complexity of horizontal integration among partners.
Keywords - Supply Chain Management, Horizontal Integration, Co-opetition