VCE Stuff > VCE Business Management
Business Manangement Examples
costargh:
--- Quote from: coblin on April 03, 2008, 10:43:17 pm ---Yeah. That sort of policy encourages ALDI to sell their bread at the equally high price rather than the low price. It's a bit like the minimum wage. If you enforce a price floor, they will just sell less (just like employers hire less). Those who are poor and cannot afford the high price will not experience a competitive price, because ALDI will have to bundle the decision of lowering the price locally with lowering the price nationally - which will cause more costs than benefits for them.
Basically speaking, it doesn't produce efficiency because instead of being able to freely change the local prices to match local demand and supply, they have to make a trade-off between meeting demand and supply in location A and location B. The social responsibility sounds all nice and fairy-tale like, but the truth is that you will see ALDI being less competitive than they previously were in the competitive areas (with lots of supermarkets). Simply put, they will conclude that the costs of being competitive in one location far outweigh the loss in revenue all across the board.
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Exactly. ALDI isn't going to lower their prices in a wealthy suburb to bring them into line with Cranbournes prices (no offence). Its like the biblical text in which some wealthy guy gives more money to the tax man than a poor woman does but what was important was the proportion of income in which they gave.
If ALDI had lower prices in Cranbourne it would show their sympathy for people doing it tough and therefore they would be seen to be socially responsible.
jsimmo:
--- Quote from: costargh on April 03, 2008, 10:39:57 pm ---I'd disagree. I think it would be more socially responsible if ALDI supermarkets in low socio-economic areas were charged at a slightly discounted price. Wouldn't that show their social concern more than putting a "one size fits all" approach around their business?
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Why would Aldi lower the price of a certain product to suit a low socio-economic area? Wouldn't the upper-class area be in disarray if their local Aldi was charging a higher price for a product that they could get cheaper in the next town? Personally, I would think that they are acting in the best interest of all customers in order to create that equal-opportunity in fair trade prices. "All consumers should be able to buy brand quality products at the same everyday low prices regardless of where they live" - wouldn't that be whether it be rich or poor?
Collin Li:
They would do it because they might be able to maximise their revenue that way. In a poor area, the quantity demanded for a certain good may be particularly low for the overall market price (since they are poor), so they may decide to decrease prices there only, to maximise revenue.
costargh:
--- Quote from: jsimmo25 on April 03, 2008, 10:52:05 pm ---
--- Quote from: costargh on April 03, 2008, 10:39:57 pm ---I'd disagree. I think it would be more socially responsible if ALDI supermarkets in low socio-economic areas were charged at a slightly discounted price. Wouldn't that show their social concern more than putting a "one size fits all" approach around their business?
--- End quote ---
Why would Aldi lower the price of a certain product to suit a low socio-economic area? Wouldn't the upper-class area be in disarray if their local Aldi was charging a higher price for a product that they could get cheaper in the next town? Personally, I would think that they are acting in the best interest of all customers in order to create that equal-opportunity in fair trade prices. "All consumers should be able to buy brand quality products at the same everyday low prices regardless of where they live" - wouldn't that be whether it be rich or poor?
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We are talking social responsibility. If ALDI wants to a shake off the tag of being "a money grabbing LSO" it would offer cheaper prices to people living in low socio-economic areas (By the way: According to a few studies this already happens. If you live in a richer area the price of your groceries is likely to be higher)
Coblin has already explained your thought regarding cheap prices for everyone.
If ALDI currently sold bread at $3 a loaf in Toorak and $2 a loaf in Cranbourne, would you reasonably expect for prices to drop in Toorak? It is far more likely that a situation would occur where prices were say $2.80 nationwide which would actually increase profits for the business. ALDI isn't going to lower its prices to people who can afford $3 a loaf for bread. Why would they appeal to society living in rich areas when their whole business is focused around supposedly cheap priced items? It is far more feasible that a scenario would arise such as I have mentioned above.
Collin Li:
No, I was saying that if ALDI was competitively selling at $2 a loaf in Cranbourne, under the national pricing system, they would not be selling at $2 across the board. They would be selling at a price closer to $2.50 because otherwise they would lose a dollar of revenue from the Toorak people. That hurts the poor, because they don't experience competitive prices. Such a system also inhibits competition and hence, the efficiency of the market system.
Obviously, this doesn't happen because there would be a huge controversy if ALDI moved their prices up after this (but I wouldn't be surprised if such a bogus claim to "social responsibility" has made before). But what you have to consider is what if the national pricing system wasn't in effect? The prices could be so much more competitive, and they would ultimately help the poor. What I am saying is that so called "fair pricing" is not fair to the poor.
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