During this month’s MFSB Strategy Alignment & Execution membership and community meeting, we explored every business’s five types of competitors. On the fifth day of implementation of our monthly framework, we delved into the concept of a competitor transforming into a strategic partner or ally and a source of competitive advantage. Check out the monthly framework overview.
Evaluate Carefully
When contemplating offering a strategic partnership to a competitor, it is essential to approach the situation with care and caution.
Why Would You Even Consider Partnering with a Competitor?
“Breaking boundaries and exploring new opportunities is vital to the growth of any business. Collaborating with a competitor can be a strategic move in a saturated market where finding an edge is key. Partnerships can help merge the strengths and weaknesses of each company to create a superior product or service that consumers can’t resist. This collaboration can lead to joint ventures and mutual benefit, further propelling both companies to success. It’s time to stop seeing competitors as a threat, but rather as a valuable resource that can be leveraged to push boundaries and innovate in the industry.”
As a business owner, the idea of partnering with a competitor may seem counterintuitive. After all, why would you want to work with someone who is vying for the same market share as you? But hear me out because there are actually several reasons why a partnership with a competitor could be a strategic move for your business.
1. Expanding Your Reach & Increasing Brand Awareness
First and foremost, partnering with a competitor can expand your reach and increase your brand awareness. By joining forces, you’ll be able to access new markets and potentially reach a wider audience than you could on your own. This is especially true if your competitor has a strong presence in a region or demographic that you haven’t been able to tap into yet.
2. Cost Savings and Operational Efficiencies
Secondly, partnering with a competitor can lead to cost savings and operational efficiencies. By sharing resources and pooling your strengths, you may be able to reduce expenses and improve your bottom line. For example, if your competitor has a more efficient supply chain or production process, you could learn from their practices and incorporate them into your own operations.
3. Competitive Advantage
Thirdly, partnering with a competitor can also give you a competitive advantage over other businesses in your industry. By leveraging each other’s expertise and strengths, you may create unique products or services unmatched by anyone else. This can set you apart in the marketplace and help you capture more market share.
Of course, there are risks to consider when partnering with a competitor. You’ll need to carefully evaluate and weigh the potential benefits against the risks and challenges of working together. However, if you approach it with an open mind and a willingness to collaborate, partnering with a competitor could be your business’s strategic move to grow and thrive.
Conditions for a Competitor to Become an Ally
The next question is, what conditions should be met when approaching a competitor with an opportunity to partner?
- Consistent display of fair and ethical practices
- Mutual respect for each other’s strengths and contributions
- Clear communication and openness to feedback and collaboration
- Shared goals and interests that align with each other’s values
- Willingness to support and promote each other’s successes and growth
- Understanding and acknowledgment of each other’s differences and limitations
- Willingness to adapt and adjust to changing circumstances and challenges together
- Consistent demonstration of trustworthiness and dependability
- Willingness to invest time and resources into the partnership for mutual benefit
- Common enemy or threat that unites them towards a common cause or mission.
Steps to Reach Out to A Potential Competitor as A Strategic Partner
- Conduct thorough research to identify the potential competitor.
- Study the market and competition to identify common goals or mutual benefits.
- Develop a clear proposal highlighting how both companies could benefit from working together.
- Choose an appropriate channel of communication (e.g., email, phone call, or face-to-face meeting).
- Craft a compelling message focusing on potential benefits and avoiding aggressive or competitive language.
- Present the proposal in a positive, collaborative, and professional manner.
- Address any concerns or questions that the competitor may have.
- Negotiate the terms and conditions of the partnership.
- Draft a comprehensive agreement outlining each party’s responsibilities, expectations, and benefits.
- Ensure open communication and transparency throughout the partnership to foster a mutually beneficial relationship.
What Are the Risks of Partnering with A Competitor?
- The possibility of loss of confidential information and trade secrets
- Increased competition in the marketplace
- Conflict of interest may arise
- Dependence on the competitor for success
- Difficulties in maintaining brand differentiation
- Decreased bargaining power
- Trust issues among customers and stakeholders
- Damage to brand reputation
- Legal complications
- Challenges in sharing resources and responsibilities.
Summary of Why and When It’s Time to Consider A Strategic Partnership with A Competitor
- When you’re both operating in a crowded market with lots of competitors, working together can help you stand out from the crowd and attract more customers.
- If you both offer complementary products or services, a partnership can allow you to create a more comprehensive offering that appeals to a wider audience.
- When you’re facing new regulatory or legal challenges that could affect both of your businesses, joining forces can help you navigate those hurdles together.
- If you’re both struggling to compete with a dominant player in the market, collaborating may help you gain more traction and level the playing field.
- When you’re considering expanding into a new geographic area or market, partnering with a local competitor can give you a leg up and help you establish a presence more quickly.
- If you both have limited resources or expertise in a certain area, pooling your knowledge and resources through a partnership can help you both achieve better results.
- When you’re looking to diversify your revenue streams, a partnership with a competitor could help you tap into new markets or create new revenue streams you wouldn’t have access to otherwise.
- If you both share a similar company culture or set of values, a strategic partnership can allow you to work more closely with like-minded individuals and organizations to achieve common goals.
Want to understand the power of competitive research and get a step-by-step process for uncovering your 5-types of competitors? Join the MFSB Strategy Alignment and Execution community to start this framework and participate in more frameworks that will help give you a competitive edge over your competitors today.
Here is what we cover just in the 5-days of implementation.
Five-Day Implementation Strategy:
Day 1: Getting Started with Competitive Research (Techniques and Tools)
Day 2: Researching Your Direct and Indirect Competitors
Day 3: Researching Your Potential, Future and Replacement Competitors
Day 4: Assemble Your Competitive Analysis Report
Day 5: When Competitors Become Allies
