Finalizing our trilogy of articles on value capture, let’s remember that value capture means the complete understanding of the network of the analyzed company and the redesign of activities towards a temptative to increase margins and as a consequence capture value. I am calling the “value capture trilogy”, since we have three major possibilities of doing this strategy. The first of the possibilities discussed in the first article, trying to reduce the cost (1). The second possibility is via differentiation strategies (2), and now, finally in this article, the third bundle of activities related to collective actions (3).

Joint or collective actions are defined as companies’ activities that could be performed together with another company, or even more than one company. These companies may be competitors or others that does not compete but operate with the same markets, and even totally non related companies. The possibilities of working together are so huge that need to be much more explored by companies in a near future due to an increase in competition, compressed margins and control costs.

I will divide collective actions in 7 areas of possibilities. Supply chain (1), internal management (2), products/brands/packaging/services (3), communications (4), marketing channels and sales (5) pricing (6) and finally, via horizontal and vertical collective associations (7).

Starting with joint and collective actions within the supply chain (1) (here considered as all the suppliers of the company), the most common activities are related to buying inputs together with other companies increasing their bargaining power with suppliers. Another idea is to create a common purchase structure shared with other companies to provide scale gains and reduce redundancies.

With internal management (2) affairs, the ideas are to invest in projects with other companies in issues related to quality, traceability, information systems, human resources management (share training, structures and others), financing and accountancy (using collective tools, sharing accountancy), lawyers and other areas. Here an analysis of what assets the company has, and how these assets can be better used by sharing with others is an important point of analysis.

Joint or collective actions in products/brands/packaging/services (3) may also contribute to capture value. Examples are to complement product portfolio with other company’s products, having a more complete offer; create new products and technologies in conjunction (reducing individual investment), facilitating adoption of new technologies and defining a dominant standard; use other company’s brands to enter in new markets (brand licensing); share services structures for clients, for example, related to the guarantee, maintenance, recall of products; and finally, use the same packaging infra-structure.

Joint or collective actions in marketing channels and sales (4), could also be done to capture value. Examples are: companies with interests in market segments can share channels and increase sales; combine efforts to open international markets; salespeople from different companies complement their product portfolio with products from another company; training about client characteristics (knowledge about client specificities) can have costs divided by two or more companies, increasing the trade of information among salespeople (sales and potential sales about their markets) and joint market studies to increase knowledge of territories for the definition of the number of salespeople, alignment of territories and determination of quotas.

In pricing (5), also several possibilities of joint and collective actions are possible. Examples are to offer a package of products and services with more value and convenience as the example of bundling in agricultural inputs. As a consequence, there is a significant chance that the client’s price sensitivity is reduced, allowing the company to charge more for the package, in comparison to a separate product. Companies also can share discounts (through loyalty cards, for example) and other pricing strategies.

Capturing value through collective actions via communications (6) also has some examples: conduct joint advertising among companies of the same industry, or companies that have the same target market; joint investments for increasing the consumption of the industry’s generic product to create knowledge and form a favorable public opinion of the product so that all participants benefit; share public relations infra-structure; sharing of stands, common exhibition and demonstration areas and other promotional activities.

The last topic for value capture is via horizontal and vertical collective associations (7). These include participation in associations, cooperatives, pools of producers, joint ventures, alliances and other collective forms. The benefits of participating in cooperatives is clear and also to have strong associations of the industry helps activities like lobbies, market protection, tax reductions and other activities that tries to protect margins.

In the final article of the “value capture trilogy” I listed 7 working points for a company that wants to capture more value with collective actions. These 7 working points may be transformed in several opportunity questions to be answered by companies raising ideas that will become projects for value capture.

The author is professor of strategic planning and food chains at the School of Economics and Business, University of Sao Paulo, Brazil (www.favaneves.org) and international speaker.