Research On Pricing Decision Making For Supply Chain Under Competition

With the rapid development of science and technology and integration of global economy, personalization and diversification of customer demand become increasingly prominent, which create a more competitive environment among enterprises. Therefore, enterprises have been reforming and innovating the traditional business management model, and established supply chain management model, which has been applied in many enterprises with great achievements. With the change of management model, the competition among supply chains gradually has become the dominant form in today’s business competition. Supply chain competition contains mostly inside competition and outside competition. Since companies in a supply chain are individual entities with conflicting management goals, there is competition among enterprises in a supply chain. In addition, the outside competition results from changes of external business environment and the entry of external enterprises and other supply chains. Therefore, the research on supply chain competition is significant both in theory and practice. This paper studies optimized decisions of supply chain members both from the inside competition and outside competition. These studies not only enrich supply chain management theory, expand supply chain optimization strategies under competitive environments, but also reveal the impact of competition on the partner’s strategies and their profits, which provide a theoretical basis for management decision makers.This paper first studies the competition among enterprises in a supply chain through considering changes of channel structure and the number of products. With the rapid development of Internet, besides selling products through traditional retail channels, many manufacturers open an online direct channel. Through running a direct channel, manufacturers can reduce operating costs, enhance the ability to negotiate with retailers and increase the competitiveness over other manufacturers. Therefore, manufacturers often choose multiple channels to sell their products. The direct channel changes channel structures, and results in a "channel conflict" and interests’damage of retailers, which leads to competition between manufacturers and retailers. In order to diminish side effects from the direct channel and enhance their competitiveness, retailers sell their private products to customers in addition to selling national products from manufacturers. Considering a manufacturer sells his national-brand product to customers through a retailer, this paper first discusses the impact of running a direct channel on the optimal pricing strategies for the manufacturer and the retailer and the relate profits. Secondly, the paper investigates the partners’ optimal pricing strategies and the relate profits when the dominant retailer introduces store-brand product. Finally, under the assumption that the manufacture has the option of exploiting direct channel, whereas the retailer has the option of store-brand product, the paper studies the impact of competition on channel structure, pricing policy and their related profits in manufacturer-Stackelberg game and Nash pricing game, respectively.This paper then studies the optimal pricing strategy and alliance structure selection strategy through considering the threats from the entry of external enterprises. With the tremendous social and economic environment changes, the external environment of supply chain becomes more complex. Enterprises in a supply chain often face threats from the entry of external enterprises. In a supply chain consisted of one manufacturer and one retailer, there is an "incursive" vendor who provides an "incursive" product which belongs to the same category with the manufacturer’s product and is partly substitutable. The vendor hopes to sell his product to consumers through the common retailer. This paper discusses the effect of the upstream entry on the partner’s optimal strategies from the upstream manufacturer’s perspective and the downstream retailer’s perspective, respectively.The paper finally studies the optimal strategy of each supply chain under the competition between supply chains. Consider two competing supply chains, each consisting of one manufacturer and one retailer. The manufacturer of each supply chain sells a product to customers in the same market through his exclusive retailer. The two products are substitutable. The two retailers compete in retail price as well as displayed quantity. This paper presents the optimal pricing/displayed-quantity of all members in the two chains and discusses the equilibrium structure of two competing supply chains.The main innovations of dissertation are summarized as follows.1. The study of competition between the manufacuter and the retailer which is caused by changes of channel structure and the number of products. Results show that the competition between the manufacturer and retailer may induce retail prices decreasing, can weaken the negative effects of double marginalization, improves the efficience of the whole supply chain and is of benefit to the consumers. The competition achieves a win-win outcome under certain conditions. Channel equalization structure depends on the operating cost of running the direct and the unit cost of store-brand product, is related with the dominant status of supply chain members. The dominant member can get more profit through "the first move advantage".2. The study of competition among the partners caused by the threats from the entry of external enterprises. The results show that the upstream entry is usually unfavorable with the manufacturer However, are always beneficial for the downstream retailer, the whole supply chain and the consumer. Facing the upstream entry, the dominant manufacturer uses a strategy of obstruction, while the optimal strategy for the dominant retailer is not allying both followers but allying either follower when the unit cost of product provided by the "incursive" vendor changes within certain bound. That is, the dominant retailer can obtain more profit through coordinating one follower and competing with the other than through coordinating both followers, and he has no incentive to coordinate the whole supply chain. Besides, the upstream entry can weaken the "double marginalization". Under certain conditions, the upstream entry can achieve a "win-win" situation for the three partners.3. The study of optimal strategy of each supply chain under the competition between supply chains. The results show that both price and displayed-quantity competition between two chains may eliminate the negative effects of "double marginalization" on the overall supply chain profit, and both price and displayed-quantity competition intensity influence significantly the equilibrium structure. Different from the competition in a single supply chain, the competition between the two chains maybe result in each chain chooses the decentralized structure rathe than the centralized strucutre. Moreover, under certain conditions, both price competition and displayed-quantity competition can have both chains fall into the prisoner’s dilemma and a game of chicken as well.