Tuesday, August 6, 2013

Fonterra: Another too big to fail enterprise

The NZ PM accused Fonterra of not being forthright and completely truthful about the situation in the company. Fonterra blamed an unsanitized pipe for the problem. My view is that Fonterra is another one of those too big to fail companies which the world today has too many of. New Zealand would take a big hit if Fonterra goes under - It is not going to. A smaller firm would have been punished to the point of driven out of business.

Big companies watch others who had ran afoul of the law get away with just fines. Any hit to the stock price was bearable. What do you think those managements would do? They take extraordinary risks that could injure the health of their customers.

I don't know how long it would take or if there would be a bifurcation that I cannot see down the road, but the age of big companies could be coming to an end. The transition could be disruptive as the primary forces pressing for this is external.

No comments:

Post a Comment