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ECO100 Economics for Business

Assessment 2: Case Study
Date due:             Week 10
Value:                   30%: Case study outline 5%; Case study 25%
Inglenook Dairy and the Australian Dairy Industry
1.0 Background
Intense competition between raw milk producers combined with high levels of market concentration in both the milk processing and retail distribution sectors have powerfully constrained the profit potential of most dairy farms.
Inglenook Dairy has embarked on a daring strategy of freeing that dairy from the fate of other raw milk producers by (a) integrating the downstream milk processing and distribution functions within their business, and (b) differentiating and distributing their products according to the needs of specific target markets. Their aim is to develop a boutique model of dairy production, processing and distribution, capture a greater share of industry profits, and secure for Inglenook Dairy a sustainable competitive advantage and improved long run profitability.
2.0 The Task
You have been commissioned by Inglenook Dairy to:
1)   Describe and analyse the structure of the Australian Dairy Industry, identifying the stages through which raw milk is produced into dairy products and distributed and marketed to final consumers.
2)   Identify and analyse the structure of any intermediate markets (ie vertically-related markets) involved in the production and distribution of final dairy products (eg perfect competition; monopolistic competition, oligopoly, monopoly)
3)   Explain the implications of the market structures for the distribution of market power in the industry, particularly power over pricing and the implications for the accumulation of industry profits at various stages of the industry production chain;
4)   explain and evaluate Inglenook Dairy’s current strategy to capture more of the industry’s potential profit by vertically integrating forward into the processing and marketing of its own dairy products;
5)   identify any opportunities for or potential threats to long run profits, and
6)   make recommendations and/or suggest any amendments to the current strategy that might
help to achieve the Dairy’s goal of sustainable long run profitability.
3.0 Due Date
Case Study Outline
Students must provide an outline of their case study two weeks prior to case study submission.
4.0 Structure and Presentation
Your report must be presented in an appropriate business format and contain:

Cover page Tables and figures as appropriate
Letter of transmission
Executive summary
Section headings

5.0 Case Materials
Lee, Tim (2012) Milk Wars, ABC Landline, 06.08.2012 Both the television program and the transcript of the program is avalaible)
ABC Rural (2013) Milking the profits – who’s talking the cream? 10.05.2013
Dairy Australia (2012) Dairy 2012 Situation and Outlook Summary Report
Mazzarol, Tim (2014) The role of co-operative enterprise in Australian agribusiness, The Conversation,19.01.2014
6.0 Case Study Report Assessment Criteria
The case study report will be assessed with reference to three sets of criteria:
the structure and presentation of the report (see 4.0 above);
the content of the report as a response to the task requirements (see (2.0 above);
the level of analysis demonstrated referenced to Bloom’s hierarchy of learning objectives
(knowledge, understanding, application, analysis, synthesis and critical evaluation).
Submission Criteria
The following elements will be assessed in this submission:

Case Study Outline
5 marks
Structure and presentation
Cover page
Letter of transmissal
Executive Summary
Section headings
Tables and figures
Referencing and Reference List
5 marks
1)  Analysis of Industry production chain
2)  Analysis of intermediate market structures
3)  Implications for prices and profit distribution
4)  Explanation of Inglenook Dairy’s strategy
5)  Identify opportunities for or threats to long run profitability
6)  Recommendations or ammendments
10 marks
Level of Analysis:
1) Analysis: Demonstrated knowledge, understanding and application of microeconomic terms and theory
2) Synthesis: Construction of a reasoned argument supporting conclusions and recommendations
3) Critical Evaluation: Critical reading of text materials, identification of points of agreement/disagreement; identification of critical information not available in the case material
10 marks
Final Mark 30 marks

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