Research On Operations Management Of Home Appliances Under The Tri-networks Convergence And Service Transformation

As the conscequences of long-time fierce price competition, the lack of industrial co-operation mechanism and the weak innovation capability, the whole home appliance industry's ability of coping with external uncertainty has dropped significantly. For the same period of time, the sharp increase of prices of copper, steel and other raw materials has eroded the profits of all the home appliance companies aggressively, which also affected their upstream and downstream partners on the value chain. The home appliance industry is confronted with transition challenges. At the same time, under the global transformation from products-oriened economy toward service-oriened economy, the volume of value created by service has surpassed that of the value created by products. To some extent, the transformation toward service not only integrated companies'resrouces and efforts for their technological innovation, scaled lean production and marketing activities, but also demonstrated their compositive capacity in the industry. Meanwhile, the current tri-networks convergence serves as an opportunity to strategically upgrade the home appliance industry and to greatly improve the value of home appliance brands.In this context, attention from all over the world has been drawn to the operation management of manufacturing companies under the new situation. However, the focus on home appliance firms has not received sufficient attention, leaving the research on the market strategies of home appliance companies under tri-networks convergence very fragmented and non-systematic. Therefore, by analyzing the value-adding opportunities and business models of services for household appliance companies, the research on operation management of them under the service-oriented transformation and tri-networks convergenceis is of important academic and practical value.Closely following the trends under service-oriented transformation and tri-networks convergence, this paper is focused on two important aspects of operation management of home appliance firms, yield management and market strategies. Firstly, we studied the transitoriness of household appliances and found that life cycle of home appliance products has been shortened by the service-oriented transformation.With accelerated rate of household appliances upgrading, transitoriness of products has been one of the most important aspects of home appliance industry. Then, we further studied the effects of invisible value-decreasing process of home appliance products on yield management methods for the industry. By analyzing the relationship between the price elasticity of demands and revenue of home appliances companies, we systematically studied the price competition of the industry for the recent years. Based on these studies of yield management, we proposed the market strategy in the current low-profitability situation for home appliance companies. Finally, by careful examination of interests distribution among n players within the value chain of tri-networks convergence, we believe it is closely relevant to the market environment, cost structure and business strategies of those involved companies. We found that due to the asymmetry structure of the two directions of tri-networks convergence, the costs of content providers has been increased dramatically to realize the two-way access of networks required by the new market. With the introduction of slack variables, according to Kuhn-Tucker conditions, a new model of allocating content resources among the three networks is then suggested.