IT and Network Organization Ecommerce IT and Network

IT and Network Organization Ecommerce

IT and Network Organization Co-opetition and co-production

IT and Network Organization Topics • Advantages of external collaboration • Cooperative Competition • Co-production and Strategic Alliances • Value Chain to Identify potential coproduction

IT and Network Organization Advantages of external collaboration

IT and Network Organization • Technologies have created new modes of production and innovation that enable and encourage a greater degree of participation and collaboration. • Aim of co-production and co-creation is to enhance organisational knowledge processes by involving, suppliers, partners, competitors, customers in the creation of meaning and value. • On the consumer level, co-creation transforms the consumer into an active partner for the creation of future value.

IT and Network Organization The search for collaborative advantage • Seek out opportunities for horizontal as well as vertical collaboration • Co-operate to grow the cake, compete on how to slice it • Leveraging capabilities and knowledge through collaboration • Share assets in the supply chain where appropriate 6

IT and Network Organization Accessing Capabilities through Collaborative Partnerships Approaches to acquiring capabilities from an external source Outsource the function requiring the capabilities to a key supplier or another provider Collaborate with a firm that has complementary resources and capabilities Engage in a collaborative partnership for the purpose of learning how the partner does things

IT and Network Organization Facilitating Collaboration with External Partners and Strategic Allies Creating a Network Structure: Strategic alliances Using “relationship managers” to build and maintain cooperative arrangements of value both parties Outsourcing arrangements Joint ventures Cooperative partnerships

IT and Network Organization Question Cite four types of Collaboration with External Partners ?

IT and Network Organization Cooperative Competition

IT and Network Organization Co-opetition: a definition A business strategy based on a combination of cooperation and competition, derived from an understanding that business competitors can benefit when they work together. A “non zero sum” scenario, in which the sum of what is gained by all players is greater than the combined sum of what the players entered the scenario with. 11

IT and Network Organization Cooperative Competition Co-opetition occurs when companies work together in parts of their business where they do not believe they have competitive advantage and where they believe they can share common costs. Basic premise: - Co-opetition strategy and value creation leverage the alliance - Partner with other shippers (even competitors) to control logistics and transport costs - Load consolidation

IT and Network Organization Co-opetition Partners • Producers, Customers, Consumers who drive producer demand determine product eco-footprint • Shippers and Terminal Operators who generate the freight flows and provide the critical infrastructure for product flow • Logistic Service Partners (3 PLs) who can design and implement optimised solutions and move the freight • Fourth Party Providers who can facilitate partnerships, referee blockages, find common ground • Governments who can assure that legal and regulatory arrangements are in place to support seamless collaboration

IT and Network Organization Co-opetition = Value Creation • Co-opetition does not simply emerge from coupling • competition and cooperation issues Co-opetition implies that cooperation and competition merge together to form a new kind of strategic interdependence between firms, giving rise to a co-opetitive system of reciprocal value creation. Source: D. Meyer, 15 th March 2011, and reubenmiller. typepad. com 14

IT and Network Organization

IT and Network Organization The supply chain of the future Market Driven Tomorrow’s Model • Virtual networks • Information based • Customer value oriented Mass production mass marketing Mass customisation one-to-one marketing Yesterday’s Model • Independent entities • Inventory Based • Low cost production Supplier Driven 16

IT and Network Organization Question What is a system of reciprocal value creation?

IT and Network Organization Co-production and Strategic Alliances

IT and Network Organization Strategic Alliances • A strategic alliance is when two or more firms share resources and activities to pursue a strategy. • They vary from simple two partner alliances coproducing a product to one with multiple partners providing complex products and solutions.

IT and Network Organization Strategic Alliances: Motives for • A frequent reason for alliances is to obtain resources that an organization needs but does not possess itself. The objective is to gain competitive advantage.

IT and Network Organization Strategic Alliances: Motives for • Two motives for such alliances are: 1. The need for critical mass – leads to cost reduction and/or improved customer offering. 2. Co-specialization – for example entering a new geographic market where the firm needs local knowledge, and the local firm requires expertise in distribution and marketing.

IT and Network Organization Strategic Alliances: Example Fiat and Mazda team up to build roadster • Fiat and Mazda, long time rivals in the market for small, relatively affordable sports cars, plan to join forces to manufacture a new two-seater roadster in Japan, in a deal that could usher in a wider-ranging global alliance. • The automakers said that they had reached a tentative agreement to design and build the rear-wheel-drive vehicle beginning in 2015. The Fiat version would be sold by Alfa Romeo, the sports car marque that the Italian group wants to reintroduce in the US and launch in China. • The deal, which the carmakers said they hope to finalise by the end of the year, extends a trend towards manufacturing alliances in the industry, as firms seek to share the rising cost of developing new models and recoup their investments more quickly through increased production volume. Source: Financial Times, May 23, 2012, Jonathan Soble and Eric Sylvers

IT and Network Organization Question Why are the main motives behind the strategic alliances?

IT and Network Organization Value Chain to Identify potential coproduction

IT and Network Organization What is Value Chain? • Represents how a business creates customer value by examining contributions of different internal activities to that value • Divides a business into a set of activities within the business – Starts with inputs a firm receives – Finishes with firm’s products or services and after-sales service to customers • Allows for better identification of a firm’s strengths and weaknesses since the business is viewed as a process

IT and Network Organization Porter’s value chain. The key to intra-business e-commerce is improving value chain efficiency.

IT and Network Organization Value Network • Set of inter-organizational links and relationships that are necessary to create and sell a product or service. Supplier Channel FIRM Buyer

IT and Network Organization Value Network The Value Chain – The value chain is the string of activities that moves a product from the raw material stage, through manufacturing and distribution, and ultimately to the end user. – By studying a product’s or service’s value chain, an organization can identify ways to create additional value and assess whether it has the means to do so. – Value chain analysis is also helpful in identifying opportunities for new businesses and in understanding how business models emerge. New vehicle development The basic value chain for new vehicles Supply chain Distribution Channel Aftermarket

IT and Network Organization Identifying collaboration Opportunities through Linking the Value Chains of the Firm and its partners: 5 1 Distribution Marketing Canning Processing Inventory holding Supplies of steel & aluminum Purchasing Inventory holding Design Engineering Manufacturing Inventory holding Distribution Sales Service & technical support Purchasing 4 3 2

IT and Network Organization Identifying collaboration Opportunities through Linking the Value Chains of the Firm and its partners: 5 1 Distribution Marketing Canning Processing Inventory holding Supplies of steel & aluminum Purchasing Inventory holding Design Engineering Manufacturing Inventory holding Distribution Sales Service & technical support Purchasing 4 3 2

IT and Network Organization Example 1. Value chain for a traditional furniture manufacturer. [All or most steps completed by the same company] Design Parts Assembly Ship and warehouse Sell – retail or catalogue Delivery

IT and Network Organization Example IKEA value chain. Ship and warehouse Design Parts Outsource to contract mfg. 3. Sell – retail or catalogue Assembl y Outsource to customer IKEA advantages: no manufacturing, assembly or delivery facilities = cost savings. Focus instead on core competencies: design, purchasing, and distribution that give it a competitive advantage. Delivery Outsource to customer The IKEA vision is to create a better everyday life for people. We make this possible by offering a wide range of well –designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.

IT and Network Organization Question What are the main differences between a Value Chain and a value network?