122 / 2024-04-21 10:05:30

Acquisition and Channel Coordination Strategies of Local Brand Manufacturers

Supply Chain Management,Acquisition,Technology Spillover Effects,Channel Coordination

In order to enhance the technical level and influence of local brands, the acquisition of overseas brand manufacturers with higher technical strength has become an increasingly popular practice of local brand manufacturers. In this paper, we examine the scenario where local brand manufacturers produces products with lower brand premium that that of overseas brand manufacturers produce, and both two brand products are then sold in the local market by local retailers. We investigate various acquisition and channel coordination strategies adopted by local brand manufacturers, considering technology spillover effects that enhance the quality of low-end products resulting from the acquisition of overseas brand manufacturers. The result shows that technology spillover effects from acquisitions are beneficial for boosting the overall profits of local brand manufacturers. However, it may not necessarily lead to an increase in the sales of local brand products. Excessive technology spillover effects may lead to the displacement of overseas brands by local brands, prompting overseas brands to exit the market. Moreover, each acquisition and channel coordination strategy for local brand manufacturers has its own advantages. Overseas brand manufacturers are also likely to achieve higher profits by acquisition, regardless of channel coordination. Additionally, acquisition may not always improve consumer surplus and social welfare.