What are the main issues? Main Issues: * Coles and woolies have decreased the price of milk ( 2 litter bottle of own- brand milk Just $2) * Based on saving my by Coles and Woolworth customer following the lower milk price; they saved $175 million * Based on saving my by Coles and Woolworth customer following the lower product price; they saved $500 million Coles and Woolworth have control the milk price * Framer are Jeopardizing and no money * Reason : * Coles and Woolworth are too powerful Coles and Woolworth 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 Woolworth * 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 accent per litter *
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 unrestricted movement of milk between states and quotas, levies and set prices for drinking milk, disappeared. Government introduced new regulations on milk prices * Market Structures: * Coles and Woolworth are not perfect competition * They are monopoly on milk product and farm product * they own 75% of the Australia market * Shocked industry leaders and put local Jobs at risk (farmer) * The price cuts led y Coles were ‘pro-competitive’ and ‘beneficial to consumers * Oligopoly: * Coles have Down Down and Woolworth have Australia’s fresh food people * Coles and Woolworth are collusion to control price and control market sales * Coles, Woolworth, customer and farmer are interdependence. However, Coles and Woolworth are cartel; * Law of Demand The graph above show the relationship of demand between price and quantity The milk price is low * Some produce is low price ( Down Down) Customer will buy more so quantity will be high. Cost- Fixed & Variable The graph above show Coles and Woolworth have use low cost however quantity, revenue and profit have increased hourly. Unemployment * Farmer cannot pay the costs of breed due to they do not have money from Coles and Woolworth have paid low money to fame * Farmer will narrow the area of livestock and reduce 7. 5 % milk product. Farmer will reduce the worker unemployment will increase 4.
Potential solutions: * Business price coordinate * Coles have contract with the Hormonal Cheese and Butter Company to roved an exclusive range of new premium cheese and milk * Coles needs to rethink its strategy and look to support the farmers * Perfect policies and regulations * Farmer can change to beef production * They need have policies about milk price or they need to support the farmers * Government intervention * They should control the price product which is sold in supermarket( more tax or minimum price) * They should support the farmers * They should offer minimum price of milk which is bought by Coles and Woolworth.
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