Revenue sharing contracts have been heavily studied and promoted in the academic literature. Yet, despite some well-recorded examples (e.g., the manner Blockbuster and film studios managed to increase availability of the latest video releases in rental shops through a revenue sharing contract), they appear to be much less common in practice. A potential reason for this gap between practice and theory is the fact that almost all academic research has focused on two party contracts involving one provider and only one buyer, while in reality, most supply chains include multiple periods.
When you will find several stages in the chainas is the case for most extended, international supply chains the traditional revenue-sharing contract is not any longer best for the two contracting parties, as every other participant in the chain is able to leverage the revenue-sharing contract to its own advantage. Put another way, a revenue sharing contract between only two parties isn't incentive- compatible. So, we suggest that a revenue sharing contract should involve each of the supply chain associates, and propose a spanning revenue-sharing contract that achieves incentive and coordination -compatibility across the same.
Revenue-Sharing Contracts Across an Extended Supply Chain case study solution
PUBLICATION DATE: July 15, 2014 PRODUCT #: BH617-HCB-ENG
This is just an excerpt. This case is about LEADERSHIP & MANAGING PEOPLE
Related Case Solutions & Analyses:
The Yin-Yang of Management: The Quest for Dynamic Equilibrium
Hospital for Special Surgery (A)
Defining the Purpose for Borussia Dortmund GmbH & Co. KGaA
Iz-Lynn Chan at Far East Organization
Peter Schultz at the Scripps Research Institute
Scooter Lindley: The Formation Call
Weathering the Storm: Awarding an Honorary Degree to Canada’s Pioneer Abortion Doctor (B)
When a Pandemic Hits: Treading H2O and the Possible Pox (C)
Nuru Energy (A): Financing a Social Enterprise Award winner Prize Winner
The Chocolate Factory (A)
