You have been commissioned by Inglenook Dairy to:
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.
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)
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;
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;
identify any opportunities for or potential threats to long run profits, and
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.
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