In businesses, as in war “know yourselfâ€? and “know your enemyâ€? have long been rules number one and two. But a third maxim — “know your friendsâ€? — is steadily moving up the list. The focus on supply chain management in the past two decades is an example of this principle at work. But suppliers and distributors are not the only partners with a potential up or down vote on your success. Companies that independently provide complementary or services directly to mutual customers — those that increase the value of each other’s offerings in customers’ eyes and the size of the total pie — can play an equally important role.

Complementors play crucial roles in Industries ranging from printing and photography to video games and cars. The quality of relations with complementors can determine the degree to- which a new product succeeds or fails and even whether a company thrives or dies. The success of digital cameras, for instance, has depended heavily on the creation of affordable home photo printers, Flash memory, and kiosks in retail outlets. In the future, electronics companies developing e-books will have to persuade traditional publishers to make a wide range of their products available in electronic form at a price that consumers will find attractive.

Complementors share many goals – notably, the desire to expand their common market. However, tensions can develop in many areas, such as pricing and technology. Hence, complementor analyzing is often as important as competitor analysis. Managers must understand what makes their complementors tick — their strengths their weaknesses and the forces that drive their business models —use that knowledge to manage the relationship to their advantage.

Managing complementors successfully requires companies to master sets of tools. The first set falls into the category of hard power: using inducement or coercion.

Bill Gates’s threat to halt development of Office for the Macintosh unless Apple adopted Microsoft’s Web browser was an example of hard power, as was Sony’s bid to attract developers to its video game platform by cutting industry standard licensing fees in half.

A smart strategist knows that ‘soft power’ can sometimes yield the same results—or at least significantly reduce the cost of using blunter tools. Soft power relies on persuasion through indirect means.

It leads others to want what you want, instead of forcing or bribing them to do as you wish. Skillful wielders of soft power also use intangible resources to build legitimacy and trust. Soft power might involve providing complementors with market intelligence or information about future product.

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