The government could intervene in Woolworths using a number of different methods such as the implementation of a price floor/ceiling, the introduction of taxes and/or subsidies, and introducing new laws that could affect Woolworths through legislation. Each of these methods would have both short and long term effects on Woolworths, but some greater then others.
There have been instances in the past of attempted intervention by the Australian Government on the supermarket industry itself, for example last year in August, the government proposed the introduction of a code of conduct governing supermarket retailers in Australia. The government proposed this in regard to the regulation of supermarket chains and their interactions with suppliers. The reason why the government proposed this particular code of conduct was due to the rising public debate of supermarket chains relationships with Australian farmers and grocery manufacturers, an issue which can be related to the topic discussed under Competition - Barriers. |
Price Ceiling/Floor?The introduction of a price floor or ceiling on a firm as large as Woolworths would create many negative and positive issues for the producer, consumers and Woolworths themselves.
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LegislationIntroduction of new legislation would create many new aspects within the industry that Woolworths operates, and can have a wide range of possibilities that the government could utilise.
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Taxes and/or subsidies?When regarding the introduction of new taxes and subsidies, it is important to keep in mind the abilities that it allows governments to obtain. Due to this, it allows governments to have precise control over what producers sell, what price they sell the product for and how they operate in relation to their producers and consumers.
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