Running head: INTEGRATION OF FAITH AND LEARNING
1
BUSI 690-D09
Liberty University
December 22, 2017
INTEGRATION OF FAITH IN LEARNING
2
In the world of trade today, there is stiff competition from the development of new ideas
and technology towards the established businesses. In the wake of innovation, many new
companies are entering the market with new products to disrupt the status quo. Some well-
established corporations are feeling the pressure from developing ones and thus resort to dubious
ways of manipulation and competition. One of the strategies the more prominent firms use is
“loss leader pricing” which involves the selling of products in prices below their original ones to
obtain a large customer flow (In & Wright, 2014). In the ethical questions at the end of chapter 6
of Rothaermel’s book, there is a case of Proctor and Gamble using loss leader pricing to force a
new entrant, Method, out of the detergent business. They have noticed that they lose market base
to the start-up.
To begin with, this strategy is unethical as it involves the predation of another firm and
forcing it out of the market. Under the antitrust laws, there is a fine line between the loss leader
pricing and predatory pricing and the difference is the motive (Edlin et al., 2015). While the
former strategy seeks to lower the prices of the products to stimulate sales of other items that are
offered at the same market price, the latter is a misuse of the market power of established firms.
In some scenarios, there are the goods that are high-profit margin and are sold at regular prices.
Under the loss leader strategy, the customer may end up buying the other items at the same time.
In the article by In & Wright (2014), they provide us with a new theory of loss-leader pricing,
based on the idea that firms offer low advertised prices for certain goods to indicate their other
(substitute) goods are also not priced too high. Consumers only want to purchase one version of
the good and firms are assumed to only advertise the price of the basic version. The business thus
does not suffer an overall net loss during the campaign period. Now when such a move aims to
damage the competitor or force them out, it is selfish and unethical. Big firms like P&G would
INTEGRATION OF FAITH IN LEARNING
3
like to monopolize the products they deal. The predatory pricing, the company wishes Method to
make insignificant sales while itself makes losses for an extended period. After the competitor
has crumbled, the big firm now makes their way back to the prices that they command. In many
instances, the loss leader pricing is applied to consumables which have a shorter shelf life like
milk, eggs, and many more. P&G applies this strategy to detergents which are not perishables.
Thus, the approach that the company uses has tripped over from loss leader to predatory pricing.
When P&G seeks to lower the prices of their products for the sake of kicking Method out of the
market, they take advantage of their market power for the damage of the other company
(Kaplow, 2017). However, the pick between the loss leader strategy and the predatory pricing is
complicated as the former is the same strategy used by the retail stores to increase customer
traffic and to survive in the market.
As Philippians 2:3-4, states, “Do nothing out of selfish ambition or vain conceit. Rather,
in humility value others above yourselves, not looking to your own interests but each of you to
the interests of the others.” While putting into caution the concept of callous rivalry, the verse
talks of the conceit which makes one consider themselves as more important than others. When
competing against each other, there exists an atmosphere of hatred among the companies and
thus a possibility of actions that only favor the interests of one side over the other. The verse also
brings to life the case of God’s kingdom and that of Satan. Humility is always an important trait
to have in business. “Whoever exalts himself will be humbled, and whoever humbles himself
will be exalted.” (Matthew 23:12). In the Kingdom of God, everybody acts in the interest of
others and offers help to those who need it the most with love. On the other hand, the Satan’s
kingdom involves manipulations, predations, and competitions. When competition begins, the
INTEGRATION OF FAITH IN LEARNING
4
sides that want to manipulate sees the other as an enemy that should be thrashed before they
strike. The Bible, however, encourages us to love one another and pray for our enemies.
As far as the pricing strategy is concerned, P&G is not taking into consideration the
principles of fair business as their main aim is to have Method kicked out. This is what the Bible
calls conceit as Proctor and Gamble have only its interest at heart. They see Method as an enemy
or an impediment to their success and control of the market. Thus, they offer to make some little
losses but know the competitor out of the market. Predatory pricing is a strategy of the powerful
and corrupt people to unfairly compete against, and take advantage of and destroy the people and
businesses that are less well of or poor. In Daniel Crane’s article on conditional pricing (2015),
he states that “Federal antitrust law has long been understood to be essentially a common law
process, and the heart of common law reasoning is analogy. Therefore, it is unsurprising that
American lawyers have been inclined to approach conditional pricing by asking "what known
practice is this like?” When the fair market is eliminated, the field is left for the monopolistic
control of the influential people and their companies, and thus the prices shoot to higher as they
seek to recover the losses they made during the campaign (Crane, 2015). The reason behind the
promotion is that they fear their products may not have competitive advantage alongside those of
the new start-up (Li, Gu, & Liu, 2013). Their products are often of poor quality and thus would
need replacement. It is also suggested in the study that “retailers with better opportunities for
cross-selling have higher incentives to adopt loss-leader pricing on high-demand products than
retailers with low cross-selling capabilities. As a result, price dispersion of a product across
retailers rises when its demand increases” (Li, Gu, & Liu, 2013). The case of P&G and Method
makes the multinationals to profit at the expense of the honest person. In most of the verses, the
Bible talks about the oppression of the poor and how Christians should abstain from looking
INTEGRATION OF FAITH IN LEARNING
5
down upon them. In this case, Proctor and Gamble are acting in a manner suggesting they need
to oppress the “poor” method as it is a startup. In a comparative perspective, P&G has a well-
established market base and therefore is equal to the rich person in the society.
INTEGRATION OF FAITH IN LEARNING
6
References
Crane, D. A. (2015). Conditional pricing and monopolization: A reflection on the state of play.
Competition L. & Pol'y Debate 1, no. 1: 44-9.
https://repository.law.umich.edu/cgi/viewcontent.cgi?
referer=https://www.google.com/&httpsredir=1&article=2843&context=articles
Edlin, A., Hemphill, S., & Kaplow, L. (2015). Professors Update 2015, Antitrust Analysis.
http://www.antitrustinstitute.org/sites/default/files/014%20C.%20Scott%20Hemphill
%20-%20Parallel%20Exclusion%20-%20%20122%20Yale%20L.J.%201182.pdf
In, Y., & Wright, J. (2014). Loss-leader pricing and upgrades: Economics Letters, 122(1), 19-22.
http://www.sciencedirect.com.ezproxy.liberty.edu/science/article/pii/S016517651300461
8?via%3Dihub
Kaplow, L. (2017). Recoupment and predatory pricing analysis.
http://www.law.northwestern.edu/research-
faculty/searlecenter/events/antitrust/documents/Kaplow_MPRecoup6.417.pdf
Li, X., Gu, B., & Liu, H. (2013). Price dispersion and loss-leader pricing: Evidence from the
online book industry. Management Science, 59(6), 1290-1308.
http://ezproxy.liberty.edu/login?url=http://search.ebscohost.com/login.aspx?
direct=true&db=eoh&AN=1390131&site=ehost-live&scope=site
