Control Structure And Vertical Contrat Choice Of Supply Chain Under Quality And Price Competition

With increasing competition among enterprises, any enterprise can hardly achieve sustained success only by themselves. In order to win the competition and keep the competition advantage long term, it is necessary for the enterprises to collaborate with the upstream or downstream enterprises and realize mutual benefit ultimately. Thus the traditional competition between enterprises has developed into the competition between supply chains with a core enterprise dominated. In previous studies, the price competition is identified as the main competition means between supply chains. However, quality is considered as the most important factors for enterprises to achieve international economic growth or long-term performance and competitiveness. Under threats of quality competition and price competition from competitors, it is difficult for enterprise to win the competition by single pricing strategy. Only supply chain provide higher quality product than competitors with suitable price can it win the dual competition. Therefore, it is an unavoidable question for any supply chain to consider quality competition based on price competition.This paper builds a quality and price competition model of chain to chain with game theory because of the lack of existing theoretical research in this field and enterprise operations management practice, the choice policies of vertical structure and vertical contract of two supply chains under quality and price competition are mainly studied in this paper from the perspective of performance improvement of supply chain members and supply chain system respectively. The main content of this paper includes: the vertical structure choice of chain to chain under quality and price competition, the choice of revenue sharing contract with longitudinal alliance of chain to chain under quality and price competition, the fixed markup contract choice of chain to chain under quality and price competition and the three-part tariffs contract choice of chain to chain under quality and price competition.On the one hand, for the vertical structure choice of chain to chain under quality and price competition, first the Bayesian model based on demand information forecast of asymmetric supply chain under price competition is constructed, and the model is further extended to the quality and price competition environment, accordingly the different characteristics of vertical structure equilibrium of competitive supply chain between single competition and double competition mode are investigated. This study shows that, under chain to chain price competition, the longitudinal centralized structure may be a equilibrium structure, however, this conclusion can not be applied to the structure choice strategy of chain to chain under quality and price competition. Instead, under quality and price competition, the two competitive supply chain choose different longitudinal structure or decentralized structure respectively become the final equilibrium structure. When the price competition is relatively weak, keeping different longitudinal structure is the final equilibrium structure and the single manufacturer(or supply chain system) achieve performance improvement. When the price competition and quality competition are all relatively strong, every supply chain keeping decentralized structure is the final equilibrium structure and the manufacturers(or two supply chains) achieve performance improvement.On the other hand, for the vertical contract choice of chain to chain under quality and price competition, the game equilibrium characteristics of contract choice of chain to chain is analyzed, the influences of quality and price competition intensity on vertical contract choice are analyzed. Study shows that the revenue sharing contract with longitudinal alliance, the fixed markup contract and the three-part tariffs contract can play an important role in improving performance of supply chain members or supply chain system. Concrete research content involves three aspects as follows:First, for the revenue sharing contract choice, a quality dual-drive supply chain model based on components-manufacturing is set up with supplier quality decision involved, and a total cost allocation and revenue sharing contract is designed to coordinate quality dual-drive supply chain. Studies show that under the centralized structure, the supplier may be a ―free-rider‖ in quality improvement, the high quality strategy make supply chain system revenue increased, low price strategy make the system revenue reduced, total cost allocation and revenue sharing contract can realize supply chain coordination and for manufacturer and supplier there is a tighter link between cost and revenue. Then under quality and price competition, the revenue sharing contract with longitudinal alliance of chain to chain is analyzed, the forming condition of longitudinal alliance and the equilibrium characteristics of revenue sharing contract choice are recognized. Research shows that: when the ratio of quality competition intensity to price competition intensity is greater than a fixed value, price competition intensity and quality marginal cost belong to an effective interval respectively, by setting rightly revenue sharing proportion the manufacturers and retailers may prefer allied structure to decentralized structure accompanied with performance improvement of both sides.Second, for the fixed markup contract choice, the equilibrium decisions and performance are obtained, the game equilibrium characteristics of fixed price contract choice are identified, and the influences of quality and price competition intensity on fixed markup contract choice are analyzed. Research shows that: whether wholesale price or fixed markup contract, the change direction of equilibrium quality and price is consistent with quality and price competition intensity, and contract alterations does not affect the correlation relationship. From the manufacturer and retailer(or supply chain system) point, when the quality and price competition intensity belong to a valid area, as long as fixed markup proportion is appropriate, then manufacturers and retailers(or supply chain system)can achieve performance improvement with fixed markup contract, otherwise, the fixed price contract may lead to performance loss.Third, for the three-part tariffs contract choice of chain to chain under quality and price competition, the transfer payment is charged according demand quantity and the quality level in addition to a fixed fee, the game equilibrium characteristics of three-part tariffs contract choice are identified, the influences of quality and price competition intensity on three-part tariffs contract choice are analyzed. Research shows that: three-part tariffs contract does not change the relationships between the equilibrium decisions and relevant parameters. If the fixed fee of three-part tariffs is moderate, the manufacturer and retailer may prefer three-part tariffs contract to wholesale price contract, otherwise, with low or high fixed fee, the three-part tariffs contract may be beneficial only for manufacturers or only for retailers. Besides, for supply chain system,two chains keeping different contracts always become the final contract equilibrium strategy, and when one supply chain choose wholesale price contract, that the other supply chain choose three-part tariffs contract is always optimal. When both manufacturers and retailers achieve performance improvement by three-part tariffs, the manufacturers may charge retailers a fixed fee or provide subsidies to retailers.The results of this paper complement and develop the chain to chain competition theory and provide theoretical basis for enterprises to choose supply chain vertical structure or vertical contract under condition of quality competition and price competition.