Abstract
Over the past ten-odd years, the dizzying prosperity and rapid development achieved in Chinese Dairy Industrial t actually covered up a fundamental defect concerning the strategy, which eventually led to the "Melamine Event”. Today, the troubled waters have been poured oil on, but it still needs time to be recovered. China's Dairy Industry, which suffered heavy losses and casualties, is about to seek for a transformation and will have to help himself out of the crisis. This paper will apply the game theory of "Prisoner's Dilemma" case to reflect the strategic defects appeared in the early dairy industrial development, with the combination of the new changes in the dairy industrial development environment after "Melamine Event”, it also points out that the key to revitalize the domestic dairy enterprises is to put the emphasis on the nature of the dairy industry itself, to return to consumers standard, to try to establish the undifferentiated marketing strategy and differentiated marketing strategy system.
Highlights
Over the past ten-odd years, the dizzying prosperity and rapid development achieved in Chinese Dairy Industrial t covered up a fundamental defect concerning the strategy, which eventually led to the "Melamine Event”
After rapid growth for a decade, Chinese dairy industry has taken a hit in melamine storm
Study on the melamine incident is essential for the strategic development of Chinese diary industry
Summary
Study on the melamine incident is essential for the strategic development of Chinese diary industry. The Chinese diary industry has developed with annual growth rate of 30% before with the continuous raise of market demand and capital input. The number of Chinese mainland massive diary industries is more than 700. They are independent and encounter predicament of price war. The notorious melamine incident is the inevitable outcome of vicious competition and effective supervision shortage. If A and B cuts its price at same extent, they would gain the same profit but lower. Excessive competition of China diary results in prisoners’ dilemma of price, promotion and advertisement. If the supervision of product quality is ineffective, the competition based on rational individual would erode the cost, and “Melamine Event” would be inevitable
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