Research On Retailer's Financing Strategy With Effort Dependent Demand

The small and medium enterprise(SME) plays an important role in China's economic development because of its large number. And SME will improve its status through increasing quantity by the background of innovation and entrepreneurship. But, the shortage of fund and difficulties in financing restrict SME's development seriously all the time. The normal methods SME usually use to alleviate the financial constraint are debt financing and equity financing.Based on earlier literatures in supply chain field and related fields, including financing and sales effort, this thesis combines sales effort with financing in connection with the reality of SME and financial institutions. Referring to the classical newsboy model, this thesis establishes three Stackelberg game models in which the manufacture is a leader and the retailer plays the role of follower in the situation of no financing, debt financing, and equity financing. In the models, before manufacture sets the wholesale price and retailer decides the level of sales effort level, financial institutions make the policy of financing, including bank's lending rate and venture capital's equity share. After solving the models, this thesis discusses the effects on manufacture and retailer's optimal strategies, and participates' profits in supply chain of retailer's own funds, moreover, study how the capital-constraint retailer chooses the best financing theory, including debt financing or equity financing.There are two main innovations in my thesis: one is the combination of financing with sales effort, another is the introduction of equity financing. The following are research results. First, the models all have equilibrium solutions under different situations, so the outcomes can be used by manufacture, retailer, and financial institutions. Second, the capital rationing of retailer has great impact on whole supply chain, and the participation of financial institution can to a certain extent mitigate the adverse effects. Finally, if the financial services are available, retailer will select the equity financing when it is short of funds seriously because the money form venture capital can be used in sales effort, and will prefer debt financing in other situations. Furthermore, the production cost, benchmark lending rate, and competition intensity will influence retailer's selection in different ways.