Coopetition

Reviewed by Apoorva | Updated on Aug 27, 2020

What is Coopetition?

Coopetition is the combination of competition as well as cooperation between companies. Businesses that engage in both competition and cooperation are said to be in coopetition.

Companies from certain backgrounds benefit by cooperating, to a certain extent, with customers, suppliers, and companies that produce products that complement their own products. The concept can be considered as a strategic alliance between hardware and software firms.

Understanding Coopetition

Coopetition is said to be a business idealogy that is derived from game theory. Coopetition games teach the ways in which partnering with competitors can create synergy. The idea is looked upon as a good business practice as it has the potential to expand the market and form many more business relationships. Such fresh relationships lead paths to develop products across industries.

Coopetition Model

The statistical model of coopetition determines its benefits and defines the allocation of market share between the competitors with ways to expand the share.

Initially, the model takes a diamond shape with each corner labelled as customers, suppliers, competitors, and complementors. The model aims at moving the market from a point where a single business gets all the profit—zero-sum game to a place where the end result benefits everyone in the system.

The critical aspect of the model is to understand the input variables that influence the players of the model to compete or cooperate. Certain inputs may make them compete, while the others may make them operate with cooperation with each other to varying extents.

Benefits of Coopetition

  • The technology industry is the most common sector where coopetition exists.

  • Coopetition between two tech companies can give a chance for both the companies to increase their individual user growth through cross-channel promotion.

  • Two or more small companies can be in coopetition to fight a larger competitor.

  • Acquisition and merger can be thought of as a form of coopetition.