Case study #5: Milk Price War
1. What are the main issues?
* Main Issues:
* Coles and woolies have decreased the price of milk ( 2 litre bottle of own- brand milk just $2) * Based on saving my by Coles and Woolworths customer following the lower milk price; they saved $175 million * Based on saving my by Coles and Woolworths customer following the lower product price; they saved $500 million * Coles and Woolworths have control the milk price
* Framer are jeopardising and no money
* Reason :
* Coles and Woolworths are too powerful
* Coles and Woolworths can sell more product
* This also affected a increasing profit
* Shopper saved more money
2. Who are the key stakeholders that are impacted by the issue? * Coles and Woolworths
* They are powerful
* They control the product price because they own 75% of the Australia market * Customer :
* Affordable price for consumers
* They will buy more because they cheap
* Inexpensive price for retailers such as coffee shop
* More cheap product are available to customer
* Farmer :
* They do not have money because their milk price has been 38cent per litre * There is no money in milk anymore so they cannot keep the dairy open * They will reduce herds or change to beef production
* They will reduce 7.5 % milk product
* There was a great deal of debate about how Australian dairy farmers would be affected * Government:
* Federal Government de-regulated the industry in 2000.
* They do not have perfect policies and regulations to control farm product price * shocked industry leaders and put local jobs at risk
3. What economic theories can be drawn?
* Government intervention
* Actions on the part of government that affect economic activity which includes “taxes”, price controls, assorted regulations, and control over government spending. * Deregulation allowed for the...
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