Should businesses trade competitive rivalries for collaboration?
In difficult times businesses should be looking for opportunities to grow and develop.
The current economic climate paints a bleak picture: the country is in one of the worst economic crises for decades; the UK has entered a double dip recession and business confidence has fallen again. Is it now time for businesses to start actively collaborating for growth instead of focussing on their competitive rivalries, asks Wales Cooperative Centre Chief Executive Derek Walker.
The business benefits of consortia working have been examined in a new Wales Co-operative Centre publication that is released today. The publication, ‘Co-operative Consortia: A Model for Growth in a Challenging Economy’, examines marketing consortia, buying consortia and tendering consortia across several sectors and demonstrates that there are both business growth and cost saving benefits available to businesses working in this way.
It is well known that Wales is dependent on its micro business sector for its economic prosperity. Micro businesses account for 94.5% of all businesses in Wales and large businesses of 250 or more employees account for only 0.8%. The Micro Business Task and Finish Group Report commissioned by the Welsh Government in January 2012 to investigate the issues facing micro businesses in Wales recommended five priority areas for Welsh Government: awareness and access to business support services; access to finance; mentoring and coaching; access to public sector procurement; and reduction of regulatory burden. Specifically the report supported the consortia approach to give micro businesses better access to public sector procurement opportunities.
The Welsh Government is currently consulting with businesses on the simplification of tendering processes and the Wales Co-operative Centre believes that the benefits of consortia working in allowing smaller businesses to team up to access larger contracts locally must be built in to this evolving framework.
There are many examples of businesses working together to access public sector procurement opportunities they could not otherwise access. In England, the South East Construction Consortium was formed by four construction companies to carry out projects for both public and private sector clients. The consortium’s aim is to apply for works that they would not otherwise have the opportunity to apply for and to ‘open doors that would otherwise be closed’. Whilst there is no indigenous Tier One construction company in Wales at the moment, consortia working could allow Welsh construction companies to deliver public sector work in Wales and ensure the finance and benefits from that work are kept in Wales.
In the South Wales Valleys, Secure Wales, a consortium of security providers was set up as a marketing consortium offering a one-stop shop approach to a full range of security services. The approach has allowed them to bid jointly for a series of bigger security contracts across the country.
Consortia aren’t just about accessing public sector contracts though. The collaborative nature of the approach can allow businesses to work together to bulk buy and lever economies of scale. Many people aren’t aware that the retail brand NISA Today is actually a consortia organisation that offers branding and bulk buy benefits to its independent retailer members. In the construction industry, both United Merchants and the National Merchant Buying Society offer their members the benefit of bulk purchased services and commodities such as invoice clearing and building materials.
The consortia model can also help businesses marketing complimentary products or services. There are many great examples of this across the Food and Tourism Sectors. In North Wales, Cilydd is a consortium of independent café’s and tea houses. The members share a common commitment to an independent ethos and use their consortium to work together to improve their marketing and their quality standards. The consortium has aspirations to create a tea and coffee culture in Wales which is a market leader in the UK. In tourism, the consortia model is well established. Tourism consortia work together to promote an area or an activity to specific sets of customers. In South Wales, the South Wales Attractions Partnership is a consortium of tourism attractions who contribute to joint marketing of their attractions to customers across Wales and England.
The benefits of consortia don’t stop at procurement, buying and marketing. In Pembrokeshire, the logistical difficulties small food producers have in getting their products to an outlet are addressed by Pembrokeshire Produce Direct which operates an online sales portal and distribution system. In West Wales, Calon Wen is a consortium of dairy farmers who have used the model to address economies of scale in production facilities, logistics and marketing. They are now an established brand with products available in most major supermarkets. In Cardiff, Oren Actors Management is a consortium of actors working together as an actors agency to find each other acting work. The consortia approach allows them to utilise the time they have between jobs to develop their acting careers and actively look for suitable roles for each other.
Collaboration can be an effective means of mitigating some of the problems that businesses currently face. A consortium arrangement can help businesses develop in a sustainable and co-operative manner. Yes, these are difficult times but as the cliché goes ‘Why waste a good crisis’? Collaboration and consortia working may provide the answer that many businesses are now looking for.
At the Wales Co-operative Centre we have thirty years experience in working with businesses to facilitate co-operation and achieve business efficiencies through collaboration. Through its specialist consortia development team, the Centre can advise groups of businesses on the most appropriate consortia structure to help them achieve their goals.
Derek Walker is Chief Executive of the Wales Co-operative Centre.