Strategic Alliance’s Formal Control Mechanism of China's Dairy Industry Based on Real Options

摘要

Many strategic alliances have been established between China’s dairy processing enterprises and their upstream raw milk supplying enterprises for the safety and supply of raw milk. But many uncertainties such as the quality, price, and volume of raw milk would have impact on the cooperation of alliance. And this paper tries to identify these uncertainties, analyze their risks and provide a control mechanism of these risks by applying the real option method. Then China’s dairy data are verified by Monte Carlo simulation. At last, some constructive suggestions about how to control dairy alliance’s risk are put forth according to our study conclusions.