Tesco is on the edge of too big to fail
Bill Grimsey’s view on Tesco’s financial crisis of profit overstatement intrigues me as I never thought thoroughly about too big a company would become a huge problem. The British government let Tesco monopolize the market and now Tesco has gone too big to address both its global and domestic problems.
I strongly agree with Bill that, “we cannot be so dependent on one company to distribute the nation’s food.” An efficient market requires many suppliers to create a competitive environment so that sustainability is possibly maximized. As technology is continuously advanced and people are always looking for a lower price, buyer power can harshly threaten big companies when customers suddenly shift their tastes. Also, political factors have huge impact on a business environment and trade markets. If the government did not ignore the potential danger of Tesco’s massive growth and place regulations immediately, Tesco would’ve not gone so hubristic and ended up in trouble.
It is important to make sure companies are capable of dealing with newly incurred issues while expanding their markets. Being overwhelmed can be fatal to a business in a long term.
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