Magazine article CMA - the Management Accounting Magazine

Competitive Networks: How to Start and the Benefits to Expect

Magazine article CMA - the Management Accounting Magazine

Competitive Networks: How to Start and the Benefits to Expect

Article excerpt

A competitive network is a group of firms that cooperate in order to compete -- that collaborate to achieve together what each cannot do alone. Network cooperation may take many forms, from the exchange of strategic information to joint ventures for product development and commercialization.

Flexible business networks are old hat in the most prosperous industrial areas of Europe -- Jutland in Denmark, Smaaland in Sweden, Wurttemberg in Germany and Emilia-Romagna in north-central Italy. As recently as 10 or 12 years ago, these same areas were in the midst of their own economic upheavals. Foreign competition, soaring energy costs and labor-management strife led to layoffs and plant closings. Large firms were in sharp decline. Newer and smaller firms were having serious difficulty keeping their heads above water. Does this sound familiar?

Today these very same areas enjoy a strong manufacturing sector, very low unemployment, high wages, growing per capita income, active entrepreneurial climates and substantial exports. Each has painstakingly rebuilt its economy by encouraging the formation of flexible business networks to improve the performance of its small to medium sized enterprises.

Flexible networks represent a general solution to the problems faced by Canadian manufacturing firms -- especially small to medium-sized enterprises -- as they attempt to gain a competitive edge in the global marketplace. By cooperating in informal networks, groups of independent companies can work together to:

* Share mounting costs of R&D

* Meld capabilities to produce new goods and services

* Aggregate production to serve large markets

* Reduce costs through joint purchases of raw material or management services

* Acquire the expensive technologies they all need, and

* Increase market share and export earnings.

Three manufacturers' networks that have been established to date in Ontario are:

* The Technology Triangle Manufacturers' Network

* South Western Ontario Manufacturers' Network

* Ottawa Manufacturers' Network.

A solution for Canadian firms attempting to gain a competitive edge.

The characteristics of each network are similar.

1. There is no cost for participation.

2. Each network is comprised of manufacturers from the same geographical area. Each network has approximately 50-75 participating companies.

3. The purpose of the network is to share ideas and solutions to common business problems.

4. No selling is allowed at network sessions. …

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