Milk price war,small businesses and farmers the losers

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Source 1: Milk price war: small business and farmers the losers [magazine]

As the price war between the three major supermarkets continues it is having a major effect on smaller businesses. Smaller businesses cannot compete with these huge price cuts and therefore consumers are choosing to buy from the three major supermarkets. The Milk Wars between the three major supermarkets has resulted in milk farmers losing money. Coles, Woolworths and Aldi have all dropped the prices of their no brand milk to $1. The severe impact on farmers and other suppliers has triggered a parliamentary inquiry. A liberal Mp Mr Scott Buchholz has come to support small business saying "We operate in a free market and it's the right of any company to turn a profit … but not at the hands of smaller business," .Many politicians including Nick Xenophon and Rob Oakeshott have presented Prime Minister Julia Gillard with a letter requiring urgent investigation. The letter discussed how supermarkets are damaging the dairy industry and affecting consumers in the long term. A spokesperson of Woolworths agreed that the milk war is damaging the Australian dairy industry and said that Woolworths would rather work with farmers than against them. This price war in going to be further investigated by the government because some people believe that it was a scheme by Coles to get rid of some smaller businesses. This source is an example of the external influence changes in market because the big three supermarkets have caused a change in the market [dropping prices of milk]which has resulted in Australian dairy farmers losing money because they cannot compete with this change in market as they will not make any profit if they drop prices any further. [1] 

Source 2: Company issues warning on beef [article]

This article is about a company called Bertocchi Smallgoods. They are a company who sell a variety of food including meats. Country Cooked Meals is the company that supplies the roast beef to Bertocchi Smallgoods, where it is then branded and sold. The article discusses how Bertocchi smallgoods have made a batch of potentially harmful roast beef products containing bacteria called Listeria. The products sold could potentially harm people and even cause death. The major group that could be affected by the bacteria are pregnant women and their child as Listeria has the ability cause paralysis. The products were sold between June the 24th and July the 8th and it affected three states Victoria, New South Wales and Tasmania. The infected meat can only be bought from Foodworks, IGA, Ritchies and other independent supermarkets. This article relates to the internal factor of production because it discusses how the business did not provide produce a healthy and acceptable product to its consumers and how this affected the company. [2] 

Source 3: Kochie's Business Builders Series 4 Episode 12 [article/video]

This text is about John Sharpe, the owner of two businesses Riverlife and Tangatours and Tangalooma Water Sports. Both his businesses are adrenaline based and include activities such as jet skiing, parasailing, snorkelling and much more. The businesses have shown huge growth over the past six years and Mr Sharpe is worried about gaining employees. He doesn't know whether to get full time, part time or casual employees. John wants his employees to be engaged with their work and maintain a high level of customer satisfaction. The text also discusses ways how John can achieve his goals. Kochie's business builders took him to a gift website that helped him learn ways to better engage his employees, he also meet Naomi Simpsom a women who taught him a variety of motivational tools. Mr Sharpe also meet with the Boost juice bar founder and she taught him how to pick employees suitable for his workforce and finally he meet Steve LImbrick from Qantas who discuses innovation techniques to meet the needs of his customers. The text talks about a specific internal influence called management. Management is the influence discussed because the employer is wondering whether to employ more people, how to get suitable employees for his business and how to keep his employees engaged and maintain high customer satisfaction. [3] 

Source 4: Supermarket Shootout [video]

This video is about three women taste testing home brand products from the three major supermarkets Coles, Woolworths and Aldi. The three women taste a variety of products such as jams, chocolate, chips etc. and decide which one they liked best. In general the women decided that the majority of home brand items were great tasty and cheaper than big name brands. They also recommended using no name brands over the big name brands because of value for money and taste. They tested 18 no brand products from each supermarket and decided that ALDI had 8 best tasting products, Woolworths had 6 and Coles had only 4. Fred Zumbo from the University of NSW who is an expert on supermarkets believes that the main reason these home brand product taste is improving is so that Coles and Woolworths can compete with ALDI. Another reason the taste of home brand products has improved according to Fred Zumbo is to increase the dominance that Coles and Woolworths has over the other supermarkets. This is an example of the external influence `competitive situation` because each of the big supermarkets was trying to make a better and cheaper brand than the other supermarkets, so they can earn the loyalty of customers and therefore earn more money. [4] 

Source 5: Online shoppers write unhappy ending for Borders, Angus and Robertson [article/video]

Borders an American book company has filed for bankruptcy and an Australian company Angus and Robertson is also losing alot of money and might close down some of their stores. There is a huge structural change in the way people buy books. Decades ago people had to walk into a book store to get a book and that was the only place you could get a book from. But know it is more common to go online and buy a book. Angus and Robertson are in trouble because the rise in the Australian dollar makes it much cheaper to buy books over the internet than through Australian book stores. Because of the previous facts the company that owns Angus and Robertson [REDgroup] is said to owe 46 million dollars. The rise in popularity of eBooks [iPads, iphone etc.] has also contributed to Angus and Robertson losing money because it is also cheaper to buy book by using eBooks. Don Grover, chief executive of Dymocks proposed a campaign two years ago that would allow businesses to buy boos directly from overseas to save money. This would have allowed publishers to sell books at cheaper prices. But unfortunately the government rejected the campaign as they thought it would put too much pressure on local publishers and writers. This is an example of the external influence `changes in Market` because consumers have decided to buy goods elsewhere due to the fact that there are cheaper goods and brand new technology. [5] 

Business Report

Executive Summary

Businesses are the backbone of the Australian economy. A business is an organisation or system that provides goods or services to the local, national or international community, most businesses sell goods and services for profit but others don't. Businesses are a vital part of the Australian economy and workforce. Businesses provide jobs, produce goods, create inventions and much more which all contribute to the workforce and economy. Businesses are influenced by the surroundings in which they operate. There are two types of business influences external and internal. External influences are influences that the business has little control over like the economy government policies and technology. Internal influences are influences that a business has some control over for example location, production and employees. Both Internal and external influences have a huge impact on a business. These impacts will be discussed further in the text.

Importance of Business in Australia

Businesses have a huge impact on Australia and its people. Businesses are needed to provide production, provide jobs, participate in charity work and be innovative and inventive. The examples provided above will be further explained below:

Production: Businesses provide many essential goods and services to the Australian public. They provide a variety of goods and services for specific portions/section of Australia like gaming consoles for children or shaving cream for men. Businesses try their best to provide the best products possible at the cheapest prices to increase the amount of products they sell. This forces other businesses to drop their own prices. This creates more choices for the consumer. An example of this occurring was Coles dropping prices of bread which resulted in Woolworths dropping the prices of their bread. [6] 

Provide Jobs: Businesses also provide the majority of jobs to Australians'. These jobs give Australians a salary or wage, good work condition and much more which allow them to support themselves and their families. SME's [small business enterprises] employ about 50% of people working with in the private sector. This is one of the major reasons why businesses are the back bone of the economy.

Innovative and inventive: businesses also play a huge role in creating brand new and fascinating products like i phones, play stations and other gadgets which entice customers and gives consumers a enjoyable way to relax. They also are very innovative. An innovation is an improvement to an existing product. An example of innovation is the digital camera. Before they were large and complex, however in present time they are much smaller and easy to use.

Charity Work: Business also plays a huge part in providing money and assistance to people in need. Many businesses provide money to charities like Salvation Army, Red Cross etc. and they also provide assistance for people who have suffered from natural disasters. Other businesses may also sponsor an organisation to help with financial difficulties. An example of a business that helps with charity is McDonalds. They are a major sponsor of clean up Australia day and provide many employs to help during clean up Australia day.

Internal Influences

An internal influence is an influence that businesses have some control over e.g. product, location, management, resource management and business culture. These internal influences all have a huge impact on a business. Such influences that may impact on the business environment include:

Management: The way a business is managed has a massive impact on the ability of a business to succeed. If a business is managed well and has good employees it has a better chance to succeed. However if a business is unorganised, dirty and has employees unwilling to work the business will probably fail. In present times businesses are managed differently to before. In the past businesses were less fluid, centralised and had a rigid structure. But in the present businesses are more fluid, decentralised and has a flexible structure. This is done to suit the continually changing consumer needs and wants. An example of management influences is identified in source three, where John Sharpe has a growing business and is worried about his new employees. He is not sure if they are engaged with their work and are maintaining a high level of satisfaction to customers. [7] 

Product: there are many product influences on a business but the main influences are types of goods and services produced, type of business and size of business. To produce a good and reliable finished product a business needs their employees to be hard working, efficient, follow instructions and on time. Production plays a pivotal role in the success of a business. If a business does not produce reliable and healthy products than consumers will not come back. There for a business will lose alot of money. Source two is a perfect example of how a business was negatively influenced by their production. Source two is about a Business called Bertocchi Smallgoods. This business accidently produced contaminated meat and was forced to call back all meat that was sold and in supermarkets. This resulted in the business losing large amount of money and time. [8] 

Location: A businesses location can be the difference between success and failure. A good location must be visible and convenient. To be convenient a store must be consistent passing trade and therefore it must be near a shopping centre or near a main road. If a businesses is not convenient or visible it can negatively affect sales and profits. When considering where to place a business the owner should consider:

Cost- how expensive is the property you are going to lease or purchase? and will your business make enough profit from that site to pay the lease or purchase?

Visibility-does your business need high visibly to succeed like a shopping centre or does it only need low visibility like a small website

Proximity to suppliers- Does your business need to be close to your suppliers to reduce cost? or doesn't the supplier's location affect you?

Proximity to customers- Does your business need to be near customer? Like retail businesses or doesn't the location matter? Because the goods are being delivered.

Proximity to support services- Does your business need to be near support services like accountants? Or does your business want to employ their own support services. [9] 

Internal influences have an enormous impact on a business. Internal influences affect the product, location, management, resource management and business culture. As seen in the articles above businesses are really affected by internal influences. An example is provided in source two. In source two the business was affected by its production. Bertocchi meats produced and supplied contaminated meats to their customers by accident. This resulted in them having to take back all their meats sold and supplied. Therefore they lost a huge amount of time and money. This is only one of the many examples of how businesses are affected by internal influences.

External Influences

An external influence is an influence that businesses have very little control over. Factors such as the economy, market, finances, geographic, social, legal, political, institutional, technological and competitive situation are all examples of external influences. These external influences all have a huge impact on businesses. Such influences that may impact a business environment are:

Economy: The economy influences businesses through the economic cycle. The economic cycle is periods of growth and recession that influence all business. The economy is continually fluctuating to 'boom' and 'bust' periods. A boom period is a period of time where levels of employment are higher, inflation increases, spending by customers increases and wage increases. A busts period is an period of time when employment levels are low, customer spending is low and inflation is low.

Boom periods are good for businesses as customers are willing to spend more. But on the other hand bust periods are bad for businesses as they customers will generally buy less. An example of how a business was affected by the economic cycle was star bucks. Star Bucks is a coffee shop that had to close a large amount of their stores as no one was willing to buy coffee during a recession. People were more worried about buying essentials like groceries. [10] 

Changes in the Market: Consumer demand for goods and services is continually changing. Due to factors like price, new technology, availability and innovation. Changes in the market can mean that a business gains customers because they have what the consumer desires. Or it can result in the business losing customers because customer demand has changed. Source 5 is a great example of how changes in the market affected Angus and Robertson. Angus and Robertson are closing a large amount of stores and are losing huge amounts of money because people are choosing to buy books from overseas. Consumers are choosing to buy from overseas because prices are much cheaper. This change in market which allows people to buy books from overseas is making it much cheaper for consumers but it is putting Australian book stores at risk. [11] 

Competitive situation: A businesses aim is to be the `market leader` and to win the loyalty of the consumers. The four factors that influence a business's ability to become the market leader are marketing strategies employed by competitors, number of competitors, local and foreign competition and ease of entry into the market. The more competitive a situation, the more likely a business is to work efficiently and produce better products. They are also more likely to drop prices to entice the consumer to buy their products instead of their competitors. Source four is a great example of how a business had to adapt to a competitive situation. In source four Woolworths dropped the prices of some products to meet the prices of the products at Coles so they did not lose any customers to Coles. This made the prices cheaper and gave consumers more variety. [12] 

External influences have an enormous impact on a business. Some external influences that a business would have to deal with include the economy, market, finances, geographic, social, legal, political, institutional, technological and competitive situation. As indentified in the sources above businesses are really affected by external influences. An example is provided in source five. In source five the business was affected by changes in market. Angus and Robertson is a book store which is quickly losing money because consumers would rather buy books online and through their eBooks. Consumers choose to use eBooks and the internet because it's much cheaper and convenient. This is only one of the many examples of how businesses are affected by external influences.


In general businesses are a very influential and important part of Australia. They provide goods and services, are innovative and creative, provide jobs and participate in charity work. Businesses are also affected by internal and external influences. These influences have both positive and negative effects on a business. Overall businesses are a major part of Australian and are one of the most important parts to Australians.

By: Andrew Boutros