Peter van Nieuwenhuizen

– Modern business organizations sometimes need strategic alliances or the outsourcing of skills to maintain a competitive advantage. Competitive advantage is not always well understood by organizations 1. Wrong criteria could be used to make decisions about strategic alliances or outsourcing of skills. The effects to make wrong decisions could have negative effects for an organization over the long term. Organizations can loose control of critical processes or capabilities. They could be in a position where their priorities do not match that of the external service provider 2. Quality levels could be lowered unless a clear quality control agenda exists between client and service provider 3. As for benefits, strategic alliances or outsourcing can create satisfactory levels of cost savings. In addition, time to market could be shortened, capabilities could be strengthened, and critical technologies could be unlocked cheaper and faster. For business organizations, these benefits often outweigh the negative effects associated with strategic alliances or outsourcing. In addition, business organizations need high investment levels in technology. Technology, after all, is a critical capability for some business organizations because their core business is about the processing and movement of large financial transaction volumes 4. Outsourcing or strategic alliances often occur in the use of technology needed by business organizations. Despite all of the above, one effect is almost unnoticed when decisions about strategic alliances or outsourcing are made. The effect of the competitive paradox, also known as coopetition, has profound implications for business organizations. This paper will attempt to explore the effects of coopetition for business organizations in South Africa. The competitive paradox has not yet been research in depth for the South African situation. Hence this paper will be a first in a series to understand the competitive paradox as it occurs in the South African business environment. As a first, exploratory, paper on the subject the outcome of this research cannot be predicted at this time. Only time will show how South African businesses could respond to the competitive paradox. " You have to compete and cooperate at the same time " – Ray Noorda, Novell in Nalebuff (1996)