Product Market Competition,Supplier Relationship And Cost Stickiness

In the process of China's macroeconomics gradually shifting from the pursuit of economicquantity growth to the pursuit of economic quality growth,the "supply-side structural reform" clearly puts forward the goal of "cost reduction".At the same time,for micro-enterprises,profit is the balance of income minus cost.With the continuous expansion of operating income,the ratio of operating cost to operating income has remained at a relatively high level.Both the transformation of macro-economy and the development of micro-enterprises have put forward realistic and urgent requirements for improving the level of cost management.Cost is the quantification of the resources invested by the company in the production process.The prerequisite for cost management is a clearer understanding of the interdependency between cost and business volume.The classic cost behavioral assumption in management accounting describes this dependency as a linear relationship.Under this assumption,regardless of the increase or decrease in business volume,the marginal variation of cost with the volume of business is always the same.Different from the complete theoretical abstraction,after considering the subjective tendency of the managers in the resource adjustment,it can be observed that the cost changes larger as the business volume increases than the extent cost decreases as the business volumedescreses in the same proportion.The dependence of cost and business volume is represented by asymmetry,that is,cost stickiness.Recognizing the cost stickiness is not only a key way to open the"black box" of cost management,but also an important bridge between management accounting and financial accounting.Therefore,this dissertation regards cost stickiness as the core issue of research.In the 1970s and 1980s,Japanese auto companies had made great strides by establishing closer cooperation with upstream and downstream companies in the supply chain.Henceforth,more and more companies have noticed that market competition is no longer the issue of companies,but is gradually transforming into supply chaincompetiton.It is an inevitable trend to transform a counterparty in a procurement business or sales business into a partner in the supply chain by establishing a long-term,stable partnership.For the cost management of the enterprise in the production business,purchasing materials from suppliers is its pre-operational business.Maintaining a good supplier relationship characterized by concentration and stability will strengthen mutual trust between the two parties,and will also help improve the quality of materials and reduce the transaction cost.Besides,stakeholders such as shareholders,creditors,governments,and the media will pay due attention to the cost management of enterprises.From the perspective of the supply chain,it has been proven that the relationship with downstream customers will have an impact on cost stickiness.It turns out that paying attention to the effect of the relationship with the supplier's stakeholders on cost stickiness also has certain necessity.Therefore,this dissertation will study the cost stickiness from the perspective of supplier relationship.Competition is the constant theme that companies face in the marketplace.Participating in market competition is the basic way for companies to acquire resources,allocate resources,and ultimately realize value creation.From the perspective of the competitive environment outside the company,when there is a transaction between the supplier and the customer,there will be a phenomenon of "big store bullying,big customer bullying".The intensity of product market competition and the competitive positionthat company is located in represent whether the company has a competitive advantage over its competitors,including suppliers and the initiative in the transaction.Competitive advantage is the key factor determining the game relationship between the companies and suppliers.From the perspective of the competitive strategy implemented within the company,the cost leadership strategy and the differentiation strategy are two basic strategies that the company can implement when participating in product market competition.In comparison,the cost leadership strategy seeks to profit by reducing costs and expanding sales,and does not pursue personalization.In contrast,the differentiation strategy relies mainly on customers who have lower price sensitivity and obtains profit from the loyalty of personalized products.The cost is not the focus of differentiation strategy.The different ways of profiting pursued by the two competition strategies also lead to great differences in the strictness of cost management and cost performance and stability of suppliers' materials.This dissertation will analyze the regulation of product market competition(including competition environment and competiton strategy)between the supplierrelationship and cost stickiness.In summary,based on the concept of supply chain management,this dissertation will incorporate procurement business(supplier management),production business(cost management)and sales business(product market competition)into a framework and do the research on cost stickiness from the perspective of supplier relationshipand compare the effect of supplier relationship on cost stickiness under different competitive environments and under different competitive strategies.The research in this dissertation can not only enrich the existing literature results,but also provide some guidance for practical activities such as cost management and supplier management.This dissertation is divided into seven parts to discuss the above issues:The first part is an introduction.The background,theoretical and practical value,research content,research methods and innovations of this dissertation will be introduced.The second part is the literature review.The domestic and international literatures related to cost stickiness will be comprehensively reviewed,the research ofeconomic consequences about supplier relationshp and product market competition also will be sorted out.On the basis of reviewing the existing research results,the inheritance and breakthrough of this dissertationwill be highlighted.The third part is the theoretical basis and analysis.The stickiness behavior of costwill be explained by comparison with the classical linear cost behavior.Based on the introduction of information asymmetry theory,corporate governance theory,and product market competition related theory,this partalso analyzes the supporting role of the above theories in this dissertation and constructs the logical relationship diagram of this dissertation.The fourth part is the empirical test of supplier relationship and cost stickiness.Based on the verification of the existence and characteristics of cost stickiness,this part will examine the effect of supplier concentration and supplier fluctuation on cost stickiness and the role of information mechanisms,governance mechanisms and control mechanisms between supplier relationship and cost stickiness.A series of robustness tests will provide more supporting evidence for the research issues to be studied.The fifth part is the empirical test of competitive environment,supplier relationship and cost stickiness.Incorporating product market competition into the research framework,this chapter will compare the different influential impact between the supplier relationship and cost stickiness when the company faces the different product market competitive strength and has the different competitive position in the product marketsThe sixth part is the empirical test of competition strategy,supplier relationship and cost stickiness.This part will examine the differences of the effects of supplier relationship on cost stickiness under different competitive strategies(differentiation strategy/cost leadership strategy).By combining the competitive environment with the competitive strategy,this dissertationwill do more deeply comparionabout the effect between supplier relationship and cost stickiness.The seventh part of the research is conclusions,policy recommendations and limitations.This part will summarize the research results and form the conclusions of this study.Based on the research conclusions,it will propose policy recommendations for practical activities such as enterprise cost management.Finally,the limitations of this dissertation will be pointed out and the future research directions will be prospected.This dissertationselects the A-share listed companies in China's Shanghai and Shenzhen stock markets from 2010 to 2017 as samples,and uses the combination of normative research and empirical research to obtain the following conclusions:(1)With the operating cost as the object,there is cost stickiness in the listed companies in China.Cost stickiness shows reversal with the extension of the inspection period,and shows the reverse with the extension of the volume of business changing.(2)The concentration of suppliers will alleviate the cost stickiness.The information mechanism plays a partial path role.The governance mechanism plays a full path role,and the control mechanism does not appear as the concentration of suppliers increasing.The fluctuation of supplier will increase the cost stickiness,and the information mechanism also plays a partial path role,but the governance mechanism does not play a significant role.(3)From the view of the competition intensity of the product market,when the competition intensity of the product market is smaller,both the alleviating effect of the concentration of the supplier on the cost stickinessand the increasing effect of the fluctuation of supplier on cost stickiness are stronger.In terms of the competitive position of the company in the market,compared with the company in the position of leaders,the concentration and fluctuation of the supplier have the greater effects on the cost stickiness for the follower in the product market.(4)From the view of the product market competitive strategy implemented by the company,compared with the differentiation strategy,when the company implements the cost leadership strategy,the effects of suppliers' concentration and fluctuation on cost stickiness are relatively stronger.Combining the competitive environment with the competitive strategy,when the product market has less competition or when the company is a leader in the product market,the supplier relationship of the company who implements cost leadership strategy affects the cost stickiness more strongly.The innovations that this dissertation seeks to achieve are:Firstly,it pays attention to the relationship between the company and the suppliers who are the important stakeholders in the procurement of raw materials,and studies the cost stickiness from the perspective of the relationship with suppliers.Secondly,based on the concept of supply chain management,the three closely related business activities of enterprise which are procurement(supplier management),production(cost management)and sales(market competition)are included in the unified research framework.It not only enriches the research results of economic consequences about supplier management and product market competition,but also provides support for coordinating various business activities in the supply chain.Thirdly,both the piecewise linear model constructed by Anderson et al.(2003)and the metric method of cost stickiness designed by Weiss(2010)are used to test the hypodissertation proposed in this dissertation.Besides,the median effect model and inter-group coefficient comparison are used to test the path mechanism between variables and the regulation of product market competition.