| Summary: | 碩士 === 東海大學 === 國際貿易學系 === 95 === The price competition of global market is serious. The low cost workers in china make the price competition more serious. In addition to servicing customers in high quality and product differentiation, the firms also use low price to attract customers. What firms must do are use outsourcing and vertical Integration to reduce their cost. In past studies about Outsourcing and Vertical Integration which all emphasize the financial affairs and the effect of firms, but we discuss how outsourcing and vertical Integration influence each other.
This research amplify Shy and Stenbacka (2004) the scope of discussion to discuss the strategic decision in Outsourcing when market structure is Monopoly in upstream and Duopoly in downstream, and we further research how Outsourcing and Vertical Integration are influenced on fixed cost and product differentiation.
Our findings are:
1. In addition to outsourcing to reduce cost, firms will have a motive to integrate with upstream. Because of cost advantage and economy of scale , the integrated firms will increase the outsourcing.
2. Because of the high fixed cost inputs, in-house of inputs are less efficient. Firms will reduce cost by increasing Outsourcing and integrating with upstream.
3. When the degree of product differentiation decrease, price competition is more serious. The integrated firms will price lower than before, so the serious price competition is unfavorable for them. The result will induce firms not to integrate with upstream.
4. When the degree of product differentiation increase, the profits and final outputs increase. The monitoring costs are cheaper than before, and firms will more and more outsource.
|
|---|
