Speaker: Baozhuang Niu,Professor, South China University of Technology
Time: 10:00, 31^th Jul. 2020
ZOOM: 685 821 53029 Password: 523965

Abstract:

Motivated by Google’s technology regulation practice in Android device industry, we consider firms’ decisions on production timing in a co-opetitive supply chain comprising a manufacturer and an original equipment manufacturer (OEM), where the manufacturer acts as the OEM’s upstream contract manufacturer and downstream competitor. Demand is uncertain, and depends on the market acceptance of product features and design. If a firm decides to implement ex-post production strategy (PS), it can delay the production until the market acceptance of its product is realized. Otherwise, ex-ante production strategy (AS) is implemented and the early commitment value is enjoyed. We find that, in the co-opetitive supply chain, PS does not always benefit either the manufacturer or the OEM, because the value of market acceptance realization is diminished by competition and the effect of early commitment under AS. Further, firms’ decisions on production timing are influenced by their market acceptance uncertainty (MAU), which can be low if the product design fits the customers’ expectation well. Both firms choose PS when they are at the risk of high MAU, while only one of them chooses PS when their MAU are moderate or high. Interestingly, when the competition is intense, the manufacturer tends to choose PS, because it can benefit from both the realized market acceptance and OEM’s early commitment.