Economics

Supply chain interactions and strategic product deletion Decisions: A Game-Theoretic analysis

Document Type

Article

Abstract

Product portfolio rationalization is critical to long-term organizational competitiveness. Rationalizing a product portfolio includes adding new products, modifying ill-performing products, or removing obsolete products. Product deletion affects supply chain relationships. For example, when firms delete a product, the supplier who solely provides for this product will be likely to be terminated. To advance knowledge on product deletion decisions, we consider competitive concerns on upstream and downstream supply chain actors and their interplay with the focal firm's strategic product deletion decisions. Specifically, we analyze a vertically differentiated market where firms decide whether to delete products from their portfolio. We consider various scenarios where competitors decide whether products should be deleted. Whether made by an individual or both firms, product deletion decisions will affect relative competitiveness and profitability measures. These findings provide managerial insights for managing supply chains. Product deletion should not be considered just a single organizational decision but an inter-organizational decision where supply chain interactions with upstream and downstream stakeholders affect organizational competitiveness. This study sets the stage for more comprehensive collaborative strategic planning in multi-tier supply chains using product deletion as a linkage. Theoretical and managerial implications provoke new avenues for future study.

Publication Date

6-2024

Volume

186

ISSN

1366-5545

DOI

10.1016/j.tre.2024.103522

Keywords

competitiveness, game theory, product deletion, product portfolio management, supply chain management

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