2007 Annual International CHRIE Conference & Exposition
512
Impact of Tourism Supply chain loyalty
Supply chain loyalty captures the difference between the customers’ preference for the two TSCs. It’s
negatively associated with the level of the cross-quantity sensitivity
μ
in our model. Because of symmetry, we only
emphasize on impact of one TSC, for example
A
TSC
. Following proposition gives the impact of supply chain
loyalty on system equilibriums:
PROPOSITION 6
. Suppose
μ
increases, and if
1
1
(
)
2
B B
A A
m n
m n
δ
μ
μ
<
+
, results are shown in following:
Quantity Price
Unit Profit
Profit
TO
↓
↓
↓
↓
HA
↓
↓
↓
↓
A
TSC
TP
↓
↓
↓
↓
The opposite is concluded if
1
1
(
)
2
B B
A A
m n
m n
δ
μ
μ
>
+
.
APPLICATION OF RESULTS
Based on the theoretical results from previous section, further analyses corresponding to each parameter are
given in this section. Many managerial implications are derived. A numerical example and a figure are illustrated for
the thorough understanding.
Impact of Market Scale
Proposition 2 illustrates that increment of market scale has positive effort on the TSC and negative
influence on competitive TSC for all the performance indexes. Banker, Khosla, and Sinha (1998) assumed that total
market scale was consistent, which implied
A
B
α
α
α
+
=
in our model. In this assumption, increment of one TSC
market size is along with decrement of the other, which magnifies the influence.
There are two implications about this Proposition. First, if a manager in TSC observes increment of market
scale, he should properly raise price or quantity decision without losing market sharing, and then get more profit.
Second, if a manager perceives market scale increasing in competitive supply chain, the optimal strategy is lowing
down the decision variables. This reaction would decrease final market price, making it more attractable, but can’t
stop the fallings of market share, unit profit and profit.
Therefore, supply chain members have strong incentive to enlarge market scale. There are two different
ways: passive one and initiative one. For instance, economic prosperity, political stabilization, and traffic condition
update advantage tourism development in the long run. Those external influences have the same effect for both
TSCs, and all enterprises are benefit passively. In the initiative aspect, advertising is the most popular approach.
Mostly, TP uses national/international advertising to strengthen the image of its brand and attract potential
consumers, while the local advertising by TO aims to gain short-term sales. Another fashion of advertising is
cooperative advertising which is an arrangement where the TP pays some or all of the cost of the local advertising
undertaken by TOs (Jørgensen, Taboubi, and Zaccour 2001). Details can refer to Huang and Li (2001) who have
shown comprehensive analyses of this advertising strategy.
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