Page 185 - Operations Strategy

160 CHAPTER 5 • PuRCHAsing And suPPly sTRATEgy
buying goods and services, or to work together on ‘pre-competitive’ research and
development. Moreover, many organisations’ value propositions are also dependent
on complementors – other businesses providing complementary services and products.

A network perspective enhances understanding of competitive and cooperative
forces
When a business sees itself in the context of the whole network it may help it to
understand why its customers and suppliers act as they do. Any operation has only
two options if it wants to understand its ultimate customers at the end of the network.
It can rely on all the intermediate customers and customers’ customers and so on,
which form the links in the network between the company and its end customers, to
transmit the end-customer needs efficiently back up the network, or it can take the
responsibility on itself for understanding how customer–supplier relationships trans-
mit competitive requirements through the network. Increasingly, organisations are
taking the latter course. Relying exclusively on one’s immediate network is seen as
putting too much faith in someone else’s judgement of things that are central to an
organisation’s own competitive health. There is also a further category of companies
in the supply network – ‘complementors’. Most businesses would find their lives more
difficult if it were not for ‘complementors’ – other businesses providing complemen-
tary services and products (for example, internet retailers depend on ‘order fulfilment’
delivery companies). Figure 5.4 illustrates the ‘value net’ for a company. It sees any
company as being surrounded by four types of players: suppliers, customers, competi-
tors and complementors.
Complementors enable customers to value your product or service more when they
also have the complementor’s product and service, as opposed to when they have yours
alone. Competitors are the opposite: they make customers value your product or ser-
vice less when they can have the competitor’s product or service, rather than yours.

Figure 5.4 The value net (based on Brandenburger and nalebuff)
Competitors

Focal company

OPERATIONS MARKET
Suppliers REQUIREMENTS Customers
RESOURCES

Complementors

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