A Study on the Co-opetition Strategies of IT After Sales Service Provider

Being beneficial from the continuous demand growth and an efficient structure of gloabl division of labor, Taiwan''s IT producers have played a significant role in the global IT industries. However, the getting shorter product life cycle due to constant technology progress puts a great pressure on the profitability. While brand and manufacturing have become two distinctive competencies and gained benefits from division of labor, so far IT after sales service activities have yet created a large business base through specialization. Moreover, the majority of IT after sales service providers have suffered from low profitability.
This study attempts to respond to this issue by providing a systematic analysis on the industrial structure and co-opetition relationships in the context of IT after sales service activities. The ultimate goal of such a research effort is to justify the positioning of specialized IT after sales service providers and formulate useful co-opetition strategies for these contenders.
With Five-force Analysis, we found that IT after sales service providers possess relatively low bargaining power to both upstream or downstream counterpart, the industry barriers to entry are not high enough to reduce potential entry, competition within the industry is intensive, so the profitability level is low. We threfore conclude some key successful factors of this industry, and thoroughly analyze the relationships between all the players in the IT industry through the Value Net framework. In order to create a relatively favorable conditions to maintain IT after sales service provider’s survival and continued growth, we suggest a set of co-opetition strategies..
Overall, we furnish three set of suggestions for IT after sales service providers.
1.IT after sales service providers should consider to consolidate the industry through merger and acquisitions so that the intensity of industry competition can be reduced.
2.They should actively seek for strategic investments from IT manufacturers so that the interlocking relationships can further enhance the technical skill of the IT after sales service provider and the services capabilities of IT manufacturer, therefore to create a win-win situation.
3.Try to work out a risk-sharing pricing model with brand company or IT manufacturers to resolve the dilemma of after sales services, and keep the consistency for the position and the benefits of both.