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Intel and Microsoft neither buy from nor sell to each other directly, but they are undeniably in business together. They are probably the world's most widely known pair of complementors--companies that independently provide complementary products or services to mutual customers. Complementors increase the value of each other's offerings and the size of the total market. So it's not surprising that so many just assume that their interests are aligned. Nothing could be further from the truth. Discord can develop in many areas, such as pricing, technology, standards, and control of the market--both in terms of which company has the most influence over customers and which one gets the biggest slice of the pie. The issue of pricing perfectly captures this tension. Ideally, you'd like to price your goods high while your complementors price theirs low. Airlines, for instance, would be happy to see vacation lodgings go for a song, while destination resorts could raise rates and still fill their rooms if customers could fly there for free. The first step in managing relationships with complementors is to develop a deep understanding of their economics, their strategies and goals, their existing capabilities, their incentives for cooperation, and any potential areas of conflict. Then, to gain the upper hand, companies can use a variety of tools that fall into two main categories: hard power (inducements or coercion to get what you want) and soft power (persuasion through indirect means to get others to want what you want). The authors explain how to build both hard power and soft, illustrate the strengths and limits of each, and offer guidelines for choosing one over the other. Conflict among complementors is inevitable, but together, hard and soft power can help companies manage the dark side of complementor relationships and take full advantage of the opportunities that cooperation should create.

AOL Europe must decide how to respond to Freeserve, a free Internet Service Provider (ISP) that has signed up 1.6 million British customers in its first six months. After becoming the leading ISP in the United States, AOL has formed a joint venture with Bertelsmann to expand into Europe. By early 1999, the new company, AOL Europe, has 2.6 million subscribers, but it has fallen behind the market leaders in Germany, France, and now, the United Kingdom. This case asks how AOL Europe should respond to the Freeserve challenge and provides information on the economics of ISPs, AOL, Europe's history and growth, and the U.K. regulatory environment to help students frame their responses. A rewritten version of an earlier case.

Supplements the (A) case. A rewritten version of an earlier supplement.

Supplements the (A) case. A rewritten version of an earlier supplement.

Supplements the (A) case.

Any company can learn to compete more effectively with stronger rivals by mastering the concept of balance in the face of attack. Balance is a judo strategy principle that emphasizes the importance of retaining the initiative and shaping the competition in ways that make it easier to win. Rather than get thrown on the defensive, successful judo strategists learn to engage with powerful opponents by mastering three techniques: grip your opponent, avoid tit-for-tat, and push when pulled. These techniques are illustrated with a variety of examples drawn from both new- and old-economy companies.

Microsoft and Intel are both obvious targets for antitrust litigation; both wield considerable control in their respective segments of the computer industry. But while Microsoft has been mired in court for years now--its name and business practices dragged through the mud, and its very future as a single company thrown into doubt--Intel has avoided a prolonged, high-profile antitrust case. Intel's success is not a matter of luck. The company's antitrust compliance program, refined over many years, has been an integral element in the chip maker's business strategy. In this article, the authors suggest that Intel's approach to compliance provides a valuable model for any enterprise that may come under regulators' scrutiny. They describe how Intel created extremely conservative antitrust compliance standards and then instituted a series of unique training events that had active support from then-CEO Andy Grove and others in senior management. Intel recognizes that no matter how cautious it is, it will always face extraordinary scrutiny as a market leader. But "since antitrust is embedded in everything we do," Grove says, "we can control our destiny."

Supplements the (A) case.

Examines the turnaround of Gucci and its transition from a single brand to a multi-brand company. A rewritten version of an earlier case.

Spreadsheet supplement for case 701-037.

In 1980, Apple was the leader of the PC industry, but by 1999, it had suffered heavy losses at the hands of the Wintel camp. This case examines Apple's efforts to create sustainable competitive advantage as the PC industry evolves. After discussing Apple's history and past strategic moves (1977-1999), the case poses the question: Can Steve Jobs make Apple "insanely great" again?

Analyzes the competition between Netscape and Microsoft in the market for Web browsers and related products. Despite its first mover advantage, Netscape sees its market share fall once Microsoft becomes "hard-core" about the Internet. By the spring of 1998, the future of both companies is on the line.