What is the importance of collaborative relationships to competition?

The competitive environment of international business is changing rapidly. To be competitive in global markets a company must meet or exceed new standards for quality and new levels of technology. There is an increasing change of pace for product development and profitability. Cost efficient, technologically advanced products are being offered by competitors and demanded in established markets as well as in markets rising from formerly Marxist-socialist economies. Opportunities abound the world over, but to benefit, firms must be current in new technology, have the ability to keep abreast of technological change, have distribution systems to capitalize on global demand, have cost-effective manufacturing, and have capital to build new systems as necessary.

The accelerating rate of technological progress, market demand created by global industrialization, and the creation of new middle classes will result in tremendous potential in global markets. But, along with this surge in global demand comes an increase in competition as technology and management capabilities spread beyond global companies to new competitors from Asia, Europe, and Latin America. Although global markets offer tremendous potential, companies seeking to function effectively in a fragmented global market of five billion people are being forced to stretch production, design\engineering, and marketing resources and capabilities because of the intensity of competition and the increasing pace of technology. Improvements in quality and staying on the cutting edge of technology are critical and basic for survival but often are not enough. Restructuring, reorganizing and downsizing are all avenues being taken by firms to strengthen their competitive positions. Additionally, many multinational companies are realizing they must develop long term, mutually beneficial relationships throughout the company and beyond to competitors, suppliers, governments, and customers. In short, multinational companies are developing orientations that focus on building collaborative relationships to promote long-term alliances and they are seeking continuous, mutually beneficial exchanges.

The environment facing multinational companies demands flexibility, quality, cost containment, cutting edge manufacturing skills, and a rapid response to market changes to sustain a competitive advantage. The strengths and capabilities a company must have to be a major player are enormous and few companies can cover all the bases all of the time. To shore up weaknesses, companies are entering relationships with others to share what each does best whether in marketing, research or manufacturing. Collaborative relationships are becoming a common way to meet the demands of global competition and a successful collaboration means that each achieves more together than either can accomplish alone.