A Two-Stage DEA–PROMETHEE II Framework for Fully Ranking Global Retail Firms in a Competitive Environment

Document Type : Research Paper

Authors

1 Assistant Prof., Department of Industrial Engineering, Faculty of Engineering, Khatam University, Tehran, Iran.

2 MSc., Department of Industrial Engineering, Faculty of Engineering, Khatam University, Tehran, Iran.

10.22059/imj.2025.390860.1008230

Abstract

Objective: In the competitive global retail industry, achieving sustainable competitive advantage is a key factor for long-term success. This advantage arises when companies effectively utilize their unique resources and capabilities to outperform competitors. Operational efficiency and financial performance are critical for evaluating competitiveness and investment attractiveness. Data Envelopment Analysis (DEA) is a standard method for measuring efficiency, but classical DEA cannot fully rank efficient units. Integrating DEA with multi-criteria decision-making (MCDM) methods addresses this limitation, considering investor-relevant financial ratios. This study proposes a two-stage approach to evaluate and rank retail companies comprehensively. 
Methodology: In the first stage, an input-oriented CCR model of DEA is applied, with assets, operating expenses, and the number of employees as inputs, and total revenue and net profit as outputs, to assess relative efficiency. In the second stage, financial indicators—asset turnover, dividend yield, return on equity (ROE), return on assets (ROA), and return on investment (ROI)—alongside DEA efficiency scores are evaluated using the PROMETHEE II method to generate a complete preference-based ranking of retailers.
Results: DEA in the first stage provides relative efficiency insights but cannot rank efficient units. Employing PROMETHEE II in the second stage, and considering financial ratios, overcomes this limitation and produces a comprehensive ranking. Validation against DEA, hybrid DEA–PROMETHEE II, and hybrid DEA–AHP rankings demonstrates a strong alignment of the results with the actual market positions of retailers.
Conclusion: The proposed method enables investors to identify high-performing companies and provides retailers with a strategic tool to monitor competitiveness, identify strengths and weaknesses, optimize resource allocation, and achieve a sustainable competitive advantage.

Keywords

References

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Industrial Management Journal
Volume 17, Issue 4
2025
Pages 199-219

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