41. (Cost management) A focus on the customer may lead companies to join forces with erstwhile competitors. “If a customer is looking for a solution to a business problem, then it’s quite common for us to work together with a competitor to find that exact solution,” says Jim Mavel, CEO and president of Scan-Optics, Inc., a

$57 million Manchester, Connecticut, firm that manufactures and supports high-performance scanners, develops software, and offers professional services.

“We also sometimes bid against that firm for other projects at the same time.”

In some cases, as part of a prearranged deal, Scan-Optics will win a contract and subcontract with a competitor that vied for, but lost, that same deal. In rarer cases, Scan-Optics incorporates a competitor’s products or services into a bid for work the competitor is also seeking.

In what may be a glimpse of the complicated business relationships of the future, a company could find itself serving as competitor, supplier, customer, and partner to another firm on an given day, says Barry Nalebuff, Yale University School of Management professor.

In today’s complex, intertwined economy, the business-as-war, winner-takeall mindset doesn’t cut it, says Nalebuff. Better to get a piece of the pie, he says, than no portion at all.

SOURCE: Harvey Meyer, “My Enemy, My Friend,” Journal of Business Strategy (Sept.–Oct. 1998), p. 42. © Faulkner &

Gray, reprinted with permission.

a. How does the contemporary use of joint ventures and other cooperative arrangements with other firms add complexity to the accounting function for a business managing its costs?

b. Why is it necessary for managers and accountants not to look only inside the firm to manage costs, but to also look outside the firm?