Strateški odgovor proizvođača dominantnom trgovcu na malo

Ranilović, Nina (2014) Strateški odgovor proizvođača dominantnom trgovcu na malo. Diploma thesis, Faculty of Science > Department of Mathematics.

Language: Croatian

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Recent market trends show that aggressive competition in trade led to global retail consolidation, which resulted in creating a few gigantic, multinational retail corporations. Manufacturer has less power in the supply chain and is forced to form a strategic response to make more profits. We consider an industry with two differentiated retailers, dominant and weak, who compete for the sale of a single product supplied by a common manufacturer. In our model, the dominant retailer has power over the manufacturer, while the weak retailer does not. The analysis suggests that the manufacturer can respond strategically to the dominant retailer’s pricing pressures by raising the wholesale price for the weak retailer over that for the dominant retailer, while simultaneously transferring demand to the high-margin (weak retailer) channel via advertising. The results suggest that the benefit to the manufacturer from this strategic response increases from either an increase in customer’s sensitivity to advertising or if customers are more loyal to the weak retailer. The difference between marginal cost of sales affects the efficiency of manufacturer’s advertising activities. The analysis shows that an increase in the cost asymmetry between the retailers reduces the effectiveness of the strategic manufacturer response. There’s also a possibility that manufacturer cooperates with the dominant retailer, instead of the weak one. In practice, dominant retailers develop the latest technology to create large data warehouses about its customers and that can help the manufacturer to adjust its product according to the market preferences. Also, manufacturer can benefit from working with this retailer by reducing its operational costs and more efficient inventory planning. Dominant retailer has lower retail prices than the weak one. State of dominance can occur when a retailer has high productivity or strong bargaining power. We compared two models that differ only with respect to whether the dominant retailer has the ability to induce favorable wholesale terms from their suppliers. It is concluded, that if dominant retailer can really force low wholesale price upon the manufacturer, than it is more likely that manufacturer will invest in joint advertising with the weak retailer.

Item Type: Thesis (Diploma thesis)
Supervisor: Šorić, Kristina
Date: 2014
Number of Pages: 39
Subjects: NATURAL SCIENCES > Mathematics
Divisions: Faculty of Science > Department of Mathematics
Depositing User: Iva Prah
Date Deposited: 07 Jul 2015 12:14
Last Modified: 07 Jul 2015 12:14

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