Creating Profit Through Alliances - business models for collaboration E-book | Page 54
From normal value to top value
having market dominance (e.g. Coca Cola's
omnipresence);
owning the customer relationship (as Dell does,
as PC assembler).
They also note that most companies produce
standard products without any cost advantage, or
even at a cost disadvantage.
A number of the most powerful business models as
described by Slywotzky and Morrison can be realised
more successfully as a partnership than on one's own.
These models are discussed below.
Controlling the standard
In the paragraphs above we discussed three
strategies for differentiation, and how various forms
of alliances can contribute to competitive advantage.
Bundling resources results in a new and more
powerful business model.
In their book „The Profit Zone‟27, Adrian Slywotzky and
David Morrison describe a number of generic 'sources
of profit protection' that allow a company or
partnership to durably set itself apart from
competitors. The main competitive advantages are
identified as:
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controlling a standard (as Microsoft does with
Windows);
controlling a value chain (Intel captures the
most profitable part of the computer chain with
its chips);
Certainly in a market (segment) that doesn't yet have
any clear standards, you can develop a new standard
jointly with others. Successful examples include Apple
and Nike with the integration of the iPod and running
shoes, and the current attempt by Chrysler with
Mercedes, General Motors and BMW to develop a
hybrid car engine.
If a standard has been set already, it may be an
option to work with the party controlling that
standard to develop distinctive supplementary
products, such as accessories for the iPhone.
Controlling the value chain
To draw profit from controlling a value chain, there
are various options:
Collaborate with a partner that owns the same
scarce resources in the value chain, and to make
price agreements where possible and
permitted. For example, two companies wit