Running head: INTEGRATION OF FAITH AND LEARNING
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Integration of Faith and Learning
Jesse N. Reed
Liberty University
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Policy Perspective
The question I would like to discuss in this paper is from chapter six of
Rothaermel’s Strategic Management Concepts. Procter & Gamble, in response to Method, a
new start-up company that is gaining market share with a new laundry detergent, P&G
lowered the price of its Tide detergent from $18 to $9 for a 150-ounce bottle only in
markets where Method’s product was for sale. The goal of this “loss leader” price drop was
to encourage Method to leave the laundry detergent market. For this reason this tactic is by
all means unethical and illegal in certain countries. In its purest form the loss leader
strategy is a practical and often times successful marketing strategy. The goal is to price
items below cost in order to attract customers into the store. Because of economies of scale
in shopping, some consumers are likely to buy other items in addition to loss-leader
products once they are in the store. Therefore, by pricing other products to compensate for
losses on sales of loss-leader products, below-cost pricing can increase store traffic and
lead to net incremental profits from the sales of other products to these one-stop shoppers
(Matsushima, 2015). This is an offensive strategy. The problem typically arises when it is
used as a defensive strategy to deter competition.
Lawsuits alleging that some loss leader pricing strategies amount to illegal business
practices have arised, although plaintiffs have not always been victorious. Opponents of
such pricing practices argue that the strategy is basically predatory in nature, designed to
ultimately force competitors out of business. Defenders of the practice contend that loss
leader pricing is simply one of many measures that retail establishments take to increase in-
store traffic and, ultimately, their financial well-being. They note that U.S. antitrust and
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trade regulation statutes are designed to protect competition, not individual competitors,
and that legitimate marketplace competition inevitably results in economic winners and
losers (Loss Leader Pricing, n.d.). There is a lot of gray area when it comes to the legality
of loss leader pricing. According to the FTC, a firm's independent decision to reduce prices
to a level below its own costs does not necessarily injure competition, and, in fact, may
simply reflect particularly vigorous competition.
Biblical Perspective
Finally, brothers, whatever is true, whatever is honorable, whatever is just, whatever
is pure, whatever is lovely, whatever is commendable, if there is any excellence, if there is
anything worthy of praise, think about these things. (Phillipians 4:8, ESV).” This is a
powerful verse. In Phillipians 3 and 4 paul talks a lot about the lessons he has learned about
sacrifice and doing what is right and just. He speaks of integrity and helping each other out
instead of focusing on selfish desires. There is no reason to be jealous when there is
opportunity for everyone to succeed. In “Phillipians 4:14-15, ESV” it says, it was kind of
you to share my trouble. And you Philippians yourselves know that in the beginning of the
gospel, when I left Macedonia, no church entered into partnership with me in giving and
receiving, except you only. Both poverty and prosperity come with serious snares. Some
things this chapter makes us consider is that poverty can leave us bitter, resenting the lack
of whatever it is we want. Prosperity can trigger pride, self-reliance and complacency. The
goal is to grow and become better. We have to learn from our mistakes and live a life of
integrity and compassion.
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Biblical Importance On The Ethical Dilemma
The crux of the problem with P&G implementing their “Loss Leader” strategy
against Method is that it is simply not noble. They are starving them out so that they don’t
have a chance to compete or even earn a profit. It is not necessarily illegal, it is arguably
unethical but it is absolutely not nice. I chose this bible verse for this particular ethical issue
because Paul could be speaking to P&G when he spoke those words. P&G is not doing
what is pure, honorable, just, lovely or even worthy of praise. Paul says to think about these
things. Consider something other than just increasing profits at all costs to include selling
products at a loss. There is nothing necessarily wrong with competition and of course there
must be a strategy in place to stay in business and fend off competitors. However even in
war there are rules that and laws that must be adhered to.
One can argue that simply lowering prices is not unethical because if Method sells
superior detergent than customers will still pay a premium for it. This competition has the
ability to drive better product creation and better prices for the customer. The fight between
a Christian worldview and business ethics can be difficult to maneuver. In the end we
should strive to operate within boundaries of Christian values. Once our competitive spirit
takes us outside of these boundaries we must listed on Paul and ask ourselves if we are
doing what is worthy of praise. Not praise from shareholders but praise from god.
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References
Loss Leader Pricing. (n.d.). Retrieved March 12, 2018, from
https://www.inc.com/encyclopedia/loss-leader-pricing.htmlMatsushima, N., &
Miyaoka, A. (2015). The effects of resale-below-cost laws in the presence of a
strategic manufacturer. Quantitative Marketing and Economics, 13(1), 59-91.
doi:10.1007/s11129-015-9154-1
