Research on the supply chain encroachment strategy of high quality manufacturer

This paper explores the best encroachment mode of entrant who produce high-quality product, and analysis the impact of encroachment on the incumbent, the impact of the service on the members of the supply chain. By analyzing the equilibrium solution of wholesale price, selling price and profit which between the two competing products under different scene. The results show that the encroachment of high-quality product will force incumbent to lower the wholesale price and selling price. However, the service level of the incumbent does not change. When the entrant sells product through retailer, it harms the interests of the incumbent manufacturer, but it will benefit the retailer. When the entrant sells directly, there exists a Pareto zone. The best encroachment mode of entrant to encroach depends on the combined impact of the degree of the quality difference, the production cost and the direct selling cost.