Marketing

The manager of a large supermarket chain in Western Australia, which has a long working relationship with local dairy farmers, has been recently faced with the decision of whether to follow his CEO’s instructions to join the milk price war by slashing prices of milk sold in his supermarket. Recently, there has been a deregulation by the government in regards to the milk industry. This has led to big supermarkets being able to sell their own brand of milk at very low costs, leading to other supermarkets following along, and local dairy farmers have no choice but to lower their prices to compete with these supermarket prices. However, this is leading to farmers not earning enough to cover costs and have to get out of the business to cut its losses. (Dollery, 2012) I will be discussing about the utilitarian model from the three ethical decision making approaches.

The utilitarian model being discussed says that an ethical decision that produces the greatest good for the greatest number of people. With this ethical decision making approach, the manager should make a decision to not join the milk price war. Although, all the major supermarkets are doing it and it benefits the customers, it causes a loss in the supermarkets earnings and is affecting many dairy farmers’ livelihood. By joining the price war, the manager would be unethical as many farmers’ rely on selling their milk at a certain price to cover their margin and are unable to follow supermarkets in reducing their prices too low. This is driving many farmers away from the dairy business and in a few years, Western Australia may not have fresh milk anymore. (Vasile, 2004)

Managers should compare and contrast alternative courses of action based on the benefits and costs of those alternatives for different organizational stakeholder groups. (Waddel, Jones, and George 2011) Meaning that the manager must choose an action that provides the most benefit to the most amount of people. Although the supermarket’s...