Networks and interorganizational relations

Evans Co. is a manufacturer of circuit boards for specialized hospital equipment. Evans is not an industry leader as its current technology is considered dated and it is under threat of losing its market share to more technically advanced competitors. Formax is a producer of component parts and is a supplier to Evans. Both companies are SMEs*. The component parts supplied by Formax are also used by Evans’s competitors. While Formax has been Evans’s chief component supplier for many years, Evans has recently developed new technology which requires component parts that they know are produced by Zercon Pty Ltd at a comparable cost to Formax, but of higher quality. Zercon is a direct competitor of Formax. The new technology Evans has produced will be ‘state-of-the-art’ and place the company in a strong competitive advantage compared to its main rivals and position it to enter overseas markets. The initial start-up costs will be high and Evans is thinking of entering into an arrangement with Zercon and also Tran Holdings, who can produce essential castings. To date, Zercon has had no dealings with Evans and to enter the business arrangement, Evans would have to reveal its new state-of-the-art technology to Zercon’s management. Evans is aware that Zercon has a good reputation for quality and service in the industry, but recently Zercon has employed a new CEO who is a close friend of Formax’s CEO.