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LIU Brooklyn’s Naoual Amrouche Stares Into the Changing Face of Business

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You don’t have to be a business professor to recognize that online retail is reshaping business around the world, but Naoual Amrouche, Assistant Professor of Marketing at LIU Brooklyn’s School of Business, Public Administration, and Information Sciences, is applying game theory to help better understand the effects of online retail on manufacturers.

In an article published in the Annals of Operations Research, Amrouche and colleague Ruiliang Yan from Indiana University analyze “A manufacturer distribution issue: how to manage an online and a traditional retailer.” They find that “…the whole channel is always better off when coordination is implemented, though channel members have different positions with regards to such decisions.”

“We were thinking of doing something about quantity discount and pricing schedule,” Amrouche said, “which is one of the hot topics in game theory. Then, we came to the point where a competition between traditional and online retailer is more intense, so it became really trendy to analyze this kind of subject, because manufacturers have different possibilities for selling their products.”

More important than being “trendy” however, the subject is a contentious one.

“There is a hot debate – sometimes even in court, actually – about manufacturers who discriminate in what kind of wholesale prices they propose to retailers,” Amrouche said, “so that’s why it’s a very interesting topic. It brings a lot of debate in terms of how manufacturers should deal with different retailers: should they offer the same wholesale price, or should it be different, and if it is different, what do you base it on?”

The answers to those questions will continue to shape business for years to come.

“From a manager’s point of view, there are two key elements that should play into the decision,” Amrouche said, “product compatibility to the web, and to what extent the product can be substituted from one channel to the other, or to what extent consumers can switch from one channel to the other.” 

As these decisions continue to play out in an ever-shifting business landscape, Amrouche will bring her research into the classroom to keep LIU Brooklyn students prepared for what awaits them as they launch their own business careers.

“The kind of competition that could exist between retailers,” Amrouche said, “whenever I have the chance, I discuss it in my classes. We discuss the conflict between these retailers, because it happens in many, many instances, and they can push the manufacturers to change completely the structure in which they sell the product. It’s a trendy topic, and whenever we have the opportunity, I discuss this kind of issue.”

Posted 02/02/2017

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