Networked Livestock Auctions in Australia

In traditional livestock auctions, the seller brings the cattle, sheep, lambs, or pigs to an auction location where they can be examined by the potential buyers who make their bidding decisions accordingly. The idea of using computerized auctions seemed attractive in Australia, a huge country with thousands of livestock producers and many hundreds of buyers representing large- and small-scale meat exporters, processors, wholesalers, and retailers. For sellers, it would reduce the transportation, stress, and injury costs of bringing animals to an auction location, and it would avoid the costs of bringing back unsold animals. It would also make their product available to more buyers. For buyers, it would reduce the cost of travel and make it practical to buy outside the local region.

To establish an auction network, an industry association called the Australian Meat and Livestock Corporation created two new divisions. One focused on quality standards and accurate and consistent descriptions of livestock. Except in very remote areas, an accredited assessor would examine and grade the livestock before the auction. The other division established a computer-aided livestock marketing system (CALM), a national auction network with cheap access to all participants, providing pre-trading information for buyers and post-trading information for sellers. The participants enter data from terminals at their sites. The seller offers a lot for sale and can include a hidden or displayed reserve price below which the sale will not occur. The bidder with the highest bid above the reserve price is obligated to buy. Five years after the system was first installed, it was being used for three to six percent of livestock sales, depending on the category. Although CALM revenues covered only half its costs, the CALM annual report claimed that CALM was cost-justifiable for the industry because it helped educate producers on assessment techniques and was a reliable national guide to market prices.

Questions:

1. Use the WCA framework to organize your understanding of this vignette and to identify important topics that are not mentioned.

2. What issues (if any) make this case interesting from an international or intercultural viewpoint?

3. Explain how ideas in this chapter help you think about this situation.

4. How would you decide whether CALM was a success?

Source: Clarke, Roger, and Michael Jenkins. The Strategic Intent of On-Line Trading Systems: A Case Study of National Livestock Marketing. The Journal of Strategic Information Systems, Vol. 2, No. 1, Mar. 1993, pp. 57-76.

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