It may seem contradictory, but I would argue that one of the best ways any business can raise its bottom line is through collaboration with those rivals it competes with. This week on the Htet Tayza blog, I use the wildly successful business model presented by Amazon to make my point.

Protection vs. Collaboration in Business

The argument for avoiding any sort of collaboration with your rivals seems obvious; collaborate and you give them access to your product, which can undercut the effectiveness of said product on the open market if they choose to exploit that access. Whilst this is certainly a rational argument, I would perhaps label it short sighted.

Whilst collaboration can damage your business model, it can also actually bolster it your profit margins and facilitate an open exchange of ideas, as well as a chance to observe alternative approaches to the market within which you trade.

Amazon Marketplace

Mammoth e-commerce media site Amazon is a great example of the effectiveness of collaboration. Back in late 2000 they introduced Amazon marketplace; a platform competitors could use to present their similar products. Sounds crazy right?

Wrong. As soon as the second quarter of 2002, Amazon announced that third party sales represented 20% of its North American sales volumes. This grew to 35% by 2010, and it continues to grow. Basically, Amazon was able to undercut the danger competitors posed to its bottom line, by offering their superior technological services to said competitors.

A Symbiotic Relationship

Does this translate to the hospitality industry, considering the fact that this particular avenue of profit potential simply isn’t open to the hospitality business model? I would argue that in fact it does, and that hospital industry businesses already use it to boost their own profit margins.

How many times have you stayed in a hotel and seen advertising for competing tour programmes, or seen a restaurant welcome promotion for the bar next door? Whilst they might lose some business, the amount of promotion both receive from such a collaboration more than makes up for it.

Htet Tayza: When Should You Collaborate With a Competitor?

Of course I’m not suggesting you collaborate with a business that offers the exact same product that you do, however where there’s crossover, giving a consumer a choice can actually lift your bottom line and promote both of your businesses in the process. There’s a reason Amazon is so iconic!

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About Htet Tay Za

My name is Htet Tay Za and I’m a young banking professional from Myanmar. I was born in Yangon, Myanmar twenty-four years ago. I have a keen interest in business, cuisine, lifestyle and philanthropy.

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