A systematic procedure to evaluate an automobile manufacturer–distributor partnership

doi:10.1016/j.ejor.2010.01.036

European Journal of Operational Research

Volume 205, Issue 3, 16 September 2010, Pages 687-698

https://doi.org/10.1016/j.ejor.2010.01.036 Get rights and content

Abstract

Automobile manufacturer–distributor partnerships are fundamental to the success of automobile companies. The complexity of the overall partnership model often causes difficulties in partnership study. This paper presents a systematic procedure to evaluate an automobile manufacturer–distributor partnership consisting of a large number of system variables. Firstly, Interpretive Structure Modeling (ISM) is used to sort system variables into groups of various characteristics. This sorting process provides an effective means to develop a three-stage hierarchic/network model of the partnership, including Stage I: partnership selection, Stage II: partnership establishment, and Stage III: partnership maintenance. Secondly, Analytic Hierarchy Process (AHP)/Analytic Network Process (ANP) are applied to partnership evaluation based on as many as 20 system variables. Relative importance weight of all variables is quantitatively determined. The most investment-worthy variables found are management strength and power. Finally, this paper makes a comparison between the optimum distributors identified by the present procedure and in practical cases. The usefulness and efficiency of the proposed procedure are ascertained with highly consistent results in the comparison.

Introduction

The automobile industry is a high capital, high technology, and high product-integrated industry. Competitive advantages of a single manufacturer rely not only on internal capability and resources, but also on close cooperation and solid relationships with external organizations (Fahy, 2002). Customers’ demands have become great diverse in the contemporary world. Without boundless power and resources, any individual company can hardly afford to satisfy all customer expectation. An automobile manufacturer has to manipulate an efficient manufacturer-distributor partnership deliberately and delicately.

Taiwan automobile market resembles a miniature version of the world market to a certain degree, in which several global automobile manufacturers intensively compete through their surrogates. Most domestic automobile manufacturers produce their cars under technical support from specific global automobile manufacturers. For example, Hotai Corporation produces solely Toyota models and Ford Lio Ho Corporation produces solely Ford models. This paper focuses on investigating partnerships in Taiwan automobile industry and presents a systematic framework for evaluating automobile manufacturer-distributor partnerships. The rest of the paper is organized as follows: Section 2 defines the problem and explains the motivation. Literature about system variables and ISM/AHP/ANP is given in Section 3; Section 4 outlines the procedure of model development and importance weight determination; Section 5 presents the data and results; and Section 6 draws the conclusions from this research.

Section snippets

Motivation and problem description

Partnerships in a variety of fields have been studied mostly from four main points of view: transaction cost theory, resources-based approaches, knowledge-based theory, and sociology approaches (Hoffmann and Schlosser, 2001). Different approaches focus on different cause–effect relationships in partnerships. Some studies emphasize the importance of managerial strength, marketing capability or potential benefits. Others focus on the interaction between commitment, trust and solidarity. An

Partnership model

The transaction cost theory posits that partners pursue minimum transaction costs that benefit their partnerships. Resource-based approaches consider partnerships as tools of partners to obtain irreplaceable or rare resources. Knowledge-based approaches emphasize on improving partners’ learning ability to survive from competition and creating value through knowledge integration. Sociological approaches explain partner collaboration through non-economic aspects such as trust or commit. Studies

Research design and methodology

This study will integrate ISM, AHP/ANP to analyze an automobile partnership between manufacturers and distributors. The research flowchart is shown in Fig. 1. The procedure is divided into three steps. Step I: Structure determination: The overall model of the partnership is constructed through the ISM procedure. Step II: Importance weight calculation: The importance weight of system variables is determined through the AHP/ANP approach. Step III: Comparison: The comparison between the present

Results of Step I: structure determination

Twenty most-relevant system variables are: 1-Conflict (CF), 2-Commitment (CM), 3-Communication (CA), 4-Culture (CU), 5-Dependence (DP), 6-Flexibility (FB), 7-Guanxi (GX), 8-Information exchange (IE), 9-Marketing capability (MC), 10-Management strength (MS), 11-Performance (PR), 12-Potential benefit (PB), 13-Power (PW), 14-Reputation (RP), 15-Resource (RS), 16-Satisfaction (SA), 17-Solidarity (SD), 18-Strategy fit (SF), 19-Termination cost (TC), 20-Trust (TR). Each system variable can also be

Conclusions

This paper presents an application of the integrated ISM/AHP/ANP method to the evaluation of a manufacturer–distributor partnership with a large number of system variables in the automobile industry. The ISM is able to identify a sophisticated system hierarchy through a series of matrix manipulation, which otherwise, would be rather difficult in a system with a wide variety of system variables. The AHP/ANP enables the determination of relative priorities of independent/interdependent system

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Innovative Applications of O.R.A systematic procedure to evaluate an automobile manufacturer–distributor partnership

Abstract

Introduction

Section snippets

Motivation and problem description

Partnership model

Research design and methodology

Results of Step I: structure determination

Conclusions

Modeling the metrics of lean, agile and leagile supply chain: an ANP-based approach

European Journal of Operational Research

A model of distributor firm and manufacturer firm working partnerships

Journal of Marketing

Valuation of urban industrial land: an Analytic Network Process approach

European Journal of Operational Research

The antecedents and performance consequences of relationalism in export distribution channels

Journal of Business Research

Explaining alliance partner selection: fit, trust and strategic expediency

Long Range Planning

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Testing the conflict-performance assumption in business-to-business relationships

Industrial Marketing Management

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Journal of Purchasing and Materials Management

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Innovative Applications of O.R.
A systematic procedure to evaluate an automobile manufacturer–distributor partnership