All-Powerful Authorities and Powerless Companies

Tallent Show via flickr || Creative Commons

The companies are fighting for survival in everyday competition against other companies. Up until that, everything is fine. It stops being fine when authorities interrupt this process. Their decisions and insensitive approach – made without consideration for economic consequences – can be fatal for companies. This is best illustrated by the two most followed “scandals” of the last and the previous summer in Slovakia.

Last year in August, there was a scandal after a consumer ended up in a coma after he ate a chickpea spread from a company called Alfa Bio. Later, it turned out that the problem was caused by consumption of a long opened product and all tests concompanyed that there is no problem with the spread whatsoever. Nevertheless, the public health authorities stubbornly and repeatedly tested samples of the spread which was responsible for the poisoning. Even after several months the authorities still sent samples to foreign laboratories. This dull and insensitive approach towards the company caused uncertainty among customers, damage to reputation and a consequent fall in sales of up to 30%. This “scandal” caused the company existential difficulties and the authorities did everything in order to worsen the situation, not to ease it.

Similarly irritated by officials (who often behave like a bull in a China shop) must have been – and rightly so – the travel agency Hechter. Its problems started when a private insurance company terminated a contract about insurance regarding insolvency. Since each travel agency has to be insured, the company had to find an alternative, which (as you can image), isn’t exactly a five-minute process. The authorities didn’t even give them a chance. With the help of media, the authorities turned what was a simple problem into a heavily publicized case. The trade inspection banned the company form selling tours and the trade licensing office informed that the company can be prevented from operating on the market or even liquidated. To forbid selling tours during the summer season is the same as to command metalwork companies to shut all their furnaces. In both cases it would result in an instant and inevitable end of operations.

When the scandals unfolded, both companies have operated on the market successfully for 20 years, enjoyed great reputation and had a base of satisfied customers. Unfortunately, the authorities ignored these facts completely, and in the end, drove the companies into severe difficulties. The officials responsible for this situation have most likely never conducted any business. Despite this fact, they should acknowledge the fact that the current and partial discord with legislature should in no case result in an instant and final liquidation of a company. The authorities shall never be all-powerful and the companies powerless.

Translated by Filip Bolčo

Jan Oravec