Analyzing entry strategies for co-opetitive supply chains with the learning effect
Journal of Modelling in Management
ISSN: 1746-5664
Article publication date: 23 June 2022
Issue publication date: 7 September 2023
Abstract
Purpose
This study aims to investigate whether the contract manufacturer (CM) should take the first-mover advantage in the end-product without supplying core components to the original equipment manufacturer (OEM) immediately, or should fully squeeze the benefit of the learning effect through an amplified production quantity by letting the OEM enter the end-product market early.
Design/methodology/approach
The authors propose a two-period model for a supply chain consisting of a CM and an OEM where the CM has four alternative entry strategies concerning it competition to the OEM in the end-product market. For each strategy, the authors derive the equilibrium solutions of the two firms using a backward approach. Comparison leads to the CM’s final choices among the four strategies.
Findings
For both CM and OEM, the monopoly and the first-entry strategies will be dominated by either the post-entry or the simultaneous-entry strategy, and thus, their preferred strategy is chosen from the latter two. Regarding the two firms choices between the post- and simultaneous-entry strategy, the CM prefers the post-entry strategy when the OEMs brand premium is at a moderate level, whereas the OEM prefers the post-entry strategy when its brand premium is low, and the learning effect can amplify the interval for the CMs adopting the post-entry strategy as well as changes the interval for the OEMs preference related to the two strategies.
Originality/value
This paper is the first one to explore the optimal strategy for a CM to maximize its profit in a co-opetitive supply chain situation with a CM and an OEM. The authors believe that our paper contributes to both literature and the market.
Keywords
Acknowledgements
This work was supported by the National Natural Science Foundation of China (Grant number: 72071188). Ningning Wang would also like to acknowledge the National Natural Science Foundation of China (Grant number: 72001002) and the Natural Science Foundation of Anhui Province (Grant number: 2008085QG338) for supporting her research.
Citation
Lu, Q., Yang, W., Zhou, C. and Wang, N. (2023), "Analyzing entry strategies for co-opetitive supply chains with the learning effect", Journal of Modelling in Management, Vol. 18 No. 5, pp. 1389-1419. https://doi.org/10.1108/JM2-11-2021-0266
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited