Sourcing strategies for competing manufacturers in the toy industry
Journal of Modelling in Management
ISSN: 1746-5664
Article publication date: 14 September 2023
Issue publication date: 1 February 2024
Abstract
Purpose
This paper aims to examine the optimal sourcing strategies and pricing decisions of competing toy manufacturers and to discuss how manufacturers’ decisions are impacted by competition.
Design/methodology/approach
The authors consider a single-period model to characterise the competition between two competing toy manufacturers. Both of them are free to choose between virgin material and recycled material. The authors consider two types of consumers: sensitive consumers who are concerned about product safety and prefer the toy made of virgin material and insensitive consumers who do not care what material is used in the toy. The competing manufacturers play a Cournot competition.
Findings
The results reveal a special case of a win-win situation for both the manufacturer and the consumer. In addition, an increasing number of sensitive consumers does not always raise the price of virgin-material toys.
Practical implications
The authors derive the manufacturer’s equilibrium sourcing strategies, corresponding market-clearing prices and profits obtained.
Originality/value
The paper investigates how toy manufacturers’ optimal sourcing strategies are impacted by competition, considering market segments.
Keywords
Acknowledgements
Financial support from the the National Natural Science Foundation of China (71991464,71921001), Major Project of the National Social Science Fund of China (18ZDA064) and the Fundamental Research Funds for the Central Universities (WK2040000027) are gratefully acknowledged.
Citation
Liang, P., Yang, F. and Shan, F. (2024), "Sourcing strategies for competing manufacturers in the toy industry", Journal of Modelling in Management, Vol. 19 No. 2, pp. 342-374. https://doi.org/10.1108/JM2-03-2023-0059
Publisher
:Emerald Publishing Limited
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