Partner Selection Based on Integration Investment for a Proprietary Component Supplier
Date Issued
2015
Date
2015
Author(s)
Lu, Chia-Hui
Abstract
Contract manufacturer is the main industry in Taiwan’s manufacture industries. Even though having technical and cost advantages, being in charge of the brand manufacturers and facing price competition. The chance for the contract manufacturer to build up an ingredient brand is easier than a product brand. After getting the intellectual property rights, contract manufacturer as component suppliers, may face the issue of selecting host products. Based on the triadic supply chain configuration with one component supplier and two product manufacturers, this study first discusses if the component supplier could change the market equilibrium and increase the potential market size. Then the study analyzes the partner selection problem in next step. By numerical analysis, we can build up the decision tree and figure out the relationship between the manufacturers’ strategy game and the supplier’s countermeasure. This paper has proven that the best strategy for the supplier is to collaborate with two manufactures. Several results are obtained. First, the degree of quality difference is the determinant factor. Second, the order of the cooperation does not mean the order of the persuading. This paper concludes that the strong manufacturer would take the initiative to cooperate in most cases, so the supplier only need to persuade the weak manufacturer.
Subjects
Proprietary Component
Ingredient Branding
Co-branding
Partner Selection
Integration Investment
Duopoly Market
Decision Tree
Type
thesis
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