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Amarjot Sidhu

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Is Transparency Too Much To Ask?

Posted: 24/02/2013 15:12

The issue of horse meat in food has been all over the news in recent weeks. DNA tests revealed the presence of horse meat in many beef products, a large proportion of which were of the supermarket's own brand. Horse meat entered the supply chain at some point, the likely reason for its insertion being the fact that it is cheap and thus reducing production costs.

Apart from the obvious issue of consuming horse meat which many people are against, this event brings light upon an epidemic of sorts. An epidemic which is spreading amongst large institutions.

In recent times many large institutions have suffered from a loss of credibility due to misconduct; the banks with their mis-selling of PPI and extravagant bonuses; the government with the MPs' expenses scandal and now supermarkets with this horse meat scandal.

As far back as I can remember big supermarket chains have been growing and justifiably so. These big supermarket chains offered the convenience, choice and price that consumers demanded. As their market share increased, as could their exploitation of economies of scale which led to the demise of many smaller firms. However, we seem to have reached a turning point. As firms grow bigger, there are benefits to be had both for the firm and the consumer. However, there comes a point where issues begin to appear: dis-economies of scale. This horse meat scandal may reflect a dis-economy of scale i.e a loss of control. Supermarket's have become so big and have almost lost sight of transparency and quality in their pursuit of lower prices. This may be a suitable time for such institutions to reflect and re-assess. Perhaps it's time to move away from an emphasis on catering for the masses and instead move towards a more personalised experience thus restoring a sense on individuality for the consumer: a small local shop experience.

It's easier said than done and i'm far from suggesting that consumers will en masse move away from big firms to smaller, local firms. In this economic climate where squeezed budgets mean low prices are the determining factor in purchases, supermarkets will still be more attractive than smaller firms. However, this event has popped the 'bubble' of security that big supermarket chains seemed to have. Hopefully moving forward, firms will accept the need for more stringent controls as well as greater re-investment on their part.

 

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