The extant literature has indicated that upstream supplier encroachment on the incumbent retailer could be beneficial to the supplier, the retailer, and the entire industry, when the supplier’s marketing disadvantage satisfies specific conditions. This study extends the previous investigations about supplier encroachment to the circumstance where the supplier is capable of managing and mitigating her marketing disadvantage, which further intensifies the retail competition and provides new managerial implications about the encroachment. We find that encroachment with cost reduction efforts does not necessarily hurt the retailer and the industry but always benefit the supplier and consumers. Compared to encroachment without the cost reduction effort, encroachment with cost reduction efforts does not necessarily benefit the supplier and the industry. Between encroachment with and without cost reduction efforts, the retailer and consumers always prefer the latter and the former, respectively. Our findings provide meaningful insights to manage cost reduction efforts in supply chain encroachment.
Remanufacturing has become an important and fast-growing industry. Many original equipment manufacturers (OEMs) cooperate with third-party remanufacturers (3PRs) through either outsourcing or licensing. They sell the new and remanufactured products either directly to the consumer or indirectly through a retailer. Our study compares the OEM’s remanufacturing strategy selection in different distribution channel structures. We demonstrate that outsourcing remanufacturing benefits the OEM when the new products are sold directly and remanufactured products, with a relatively low valuation, are sold indirectly; otherwise, licensing remanufacturing is more beneficial for the OEM. We further find that when consumers perceive the remanufactured products with a sufficiently high value, the selection of remanufacturing strategies benefits consumers, society, and the environment.
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