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Wayne (2007) reported in his article about another problem that the industries and homes are facing today. The article was about the shortage of milk as a cause for raising its price in the markets. It is a relevant management issue because it pictures the effects of rising prices of a product and its effect on the economy.
Wayne discussed the factors leading to the rising prices of milk around the world. The rising global economy has contributed to the raising prices of milk, causing other commodities which use milk to raise prices as well. This was termed as the global demand for milk, which proved to be hard to be met due to milk shortage and other significant factors. This is also an indicator for price to increase.
Now, more people can afford to buy milk because of the rising incomes of countries. Moreover, producers of chocolates, cheese, ice cream and other products which use milk need continuous supply of milk. As the Law of Supply and Demand illustrates this high demand and the fact that there is a shortage of milk in milk-producing countries made it even more expensive. Several factors also added to this problem, such as demand-pull inflation (the rising demand for biofuels) and cost-pull inflation (the rising cost of production).
The problem associated with this is that even if there will be an ample amount of milk to be distributed to different countries, its price will not go down immediately. There will still be difficulty in meeting the demand for more milk.
However, producers of milk will benefit in one way or another. The rising cost of production means more money.
Arnold, Wayne. (2007, September 4). A Thirst for Milk Bred by New Wealth Sends Prices Soaring. The New York Times online. Retrieved on September 6, 2007, from www.nytimes.com