Creating Profit Through Alliances - business models for collaboration E-book

Value of participating in a network collaboration turns out to restrict one another's possibilities. In 2006, a number of Dutch companies active in the field of electronics, optical equipment, injection molding and metal working decided to start collaborating under the name of Mechatronics Partners. All are relatively small in size and turnover, but together they have around 600 employees, of which 100 engineers in the field of designing, engineering and constructing electronic equipment like DVD players, control cabinets and industrial machines. The basic rules for the partnership were set out on just three sheets of paper:   The preceding paragraphs basically assumed a collaboration between two companies, with a view to what this may be worth. Analogously, we can examine the value for a company of participating in a network. In a network, multiple parties collaborate and have more complex relations than in two-party alliances. The profit made by the company through the network should be compared against the profit that it would make on its own. One reason to collaborate with others in a network is the expectation that the participating companies can complement each other, for instance in research and product development, or in production or reaching customers. This synergy should ensure that the profit of the network exceeds the sum of individual profits. At times a network can achieve negative results for the participants, for example because the  Every company does acquisition through its own network. Joint sales and marketing activities are paid together. Every month representatives from the companies sit together to discuss the market opportunities and to decide in which combination a bid will be made. Each participating company will calculate its cost price, and the margin is decided jointly. External quotations are used to monitor the competitiveness of the prices. In case of a successful bid, one of the companies will provide a project leader, who coordinates the joint efforts and is contact person for the customer. The expected extra turnover for 2009 as a result of this team approach was between 3 and 4 million dollars, which is relatively small on a total joint turnover of around 100 million, but most of it is annually recurrent revenue. Apart from that, the sharing of contacts and market information has helped the individual companies expand their own activities. 59

Creating Profit Through Alliances - business models for collaboration E-book | Page 61