I agree that Cadbury UK should build an internal strategy to respond quickly to market issues and not invest too much during this ‘waiting’ period while the UK government negotiates it’s Brexit T&Cs with Europe. Moreover, automation will help reduce the dependency on skilled labour, which could be effected by Brexit. With the incorporation of AI, the ‘robotisation’ of factories is a good strategy for quality consistency and long term cost reduction, irrespective of Brexit.
On the question of British brand heritage, I believe we live in such a globalised world and are so accustomed to parts / raw materials being sourced in Germany, assembled in China and shipped to the US, that moving Cadbury production facilities abroad will not have a major impact on domestic demand. As long as Cadbury maintains a strong cultural and branding association with the UK in terms of it’s partnerships, packaging and sponsorships – it can maintain strong brand loyalty.
Lastly, while uncertainty certainly exists today for British corporations, I question if Brexit could be a positive trend for UK Inc.? The UK will gain more control over it’s monetary and fiscal policy and hence can create attractive terms for foreign investors such as tax loopholes and SEZ’s. Nations such as Dubai and Singapore have thrived on few natural resources by creating strong governance / institutions and incentives for global talent to live in their respective companies. London is a huge competitive advantage that attracts top talent from all over the world as ‘a great city to live’ and it will be tough for executives to re-locate to Frankfurt with their families.
Cesario – thanks for sharing this ‘intellectually’ provocative piece.
I would disagree that blockchain is innovative as the internet. The internet has a wider application of impact from new distribution channels (commercial aspect) to universal access to information (social impact). I believe the social impact outweighs the business arguments, which has not been covered in this essay. Perhaps it is too early to assess the society impact given blockchain is in it’s first phase.
Albeit difficult to quantity the social impact, the internet has changed the way our generation – the ‘millennials’ – has grown up and views the world. Compared to an era one or two generations ago where neighbours such as the French & British viewed each other with hostility and suspicion, the internet has broken barriers, facilitated conversations and engagement with other corners of the world making us more intrigued in travel and tolerant to new cultures. I’m very interested to see the wider effects of blockchain technology in generations to come!
From a commercial aspect, given the hype around blockchain, do you not expect new entracnts to join rapidly and challenge IBM’s dominance? Also, how secure are these blockchain technologies from hackers disrupting global supply chains?
Yash, interesting post – lot of open questions about the future of British industry and technology!
After being acquired by Tata, analysts speculated if Tata would move JLR production to India, incorporate with existing Tata Motors facilities and reduce cost. I believe Tata was very intelligent to recognize JLR’s British heritage and luxury appeal of being made in the UK – contributing to their success story. Hence I would be skeptical of moving production to Slovakia – from a product quality and branding perspective.
The innovation lab sounds interesting – I think the automotive industry has to react to electric vehicles by incorporating green vehicles into their fleet. Tesla has highlighted strong design and driver experience can be incorporated whilst also reducing carbon emissions, hence the trend to electric vehicles seems inevitable. JLR can leverage it’s design and brand, while partnering with an electric specialist.
On the Brexit implications, the access to talent and engineers seems to be a large concern. JLR should consider investing in global co-ordination of it’s engineering teams so they become more used to working remotely / online before it becomes a necessity.
Rasha, thanks for sharing. Your post got me thinking about a few issues:
1. The need for consummative regulation – on Sales of $37 Bn, Tyson was fined just $2.5 Mn for very irresponsible social behaviour, which is unlikely to be a strong enough incentive to change behaviour. Assuming the firms primary goal is profit maximisation (like all good Neoclassical Economists), governments need to impose stronger regulations. This should be in conjunction with social and media pressure, which is likely to be more effective – but in combination with regulation climate change stands a stronger chance!
2. Plant based protein seems like a good solution, however will traditional consumers used to their ‘beef’ burgers be willing to switch? What type of marketing and awareness campaigns would be effective to create demand for soya or plant based meats? Moreover, will the price be attractive and how will the taste compare? Ideally if the product is comparable on taste and quality, the industry has only one role around customer education.
This is a really interesting post and potential strategy for BMW to cut out it’s typical distribution channel, go direct to customer, collect data and a relationship with it’s customers, whilst also lowering it’s physical cost base.
While it sounds great on paper, it got me thinking about the how luxury brands such as BMW, that for the past few centuries have relied on ‘exclusive’ marketing strategies, are now having to adapt to digital customer requirements and increase access points to engage with their customers.
Will having a virtual BMW experience reduce the luxury appeal of the car as it’s accessibility is universal? Can BMW charge premium prices due to the customer store experience and test drive, which highlight the engineering ‘superiority.’ Moreover, do buyers of BMW value the fact that they are in a smaller group of consumers who can afford and experience the product? While this could be a good short term strategy to sell more cars and boost profitability, luxury companies will have to consider if these ‘mass’ marketing moves will reduce their long term brand equity.
Limiting supply and creating a ‘hype’ factor has been a common strategy employed by many luxury players. For example De Beers limits the supply of diamonds, inflating the price and creating an allure of rareness.
Danny, really interesting post! You bring to light the rapid technology shift in the energy industry and disruption from dirty oil / HFO to cleaner energy sources. A few questions around the entrenched interest of the oil majors and potential delays in the implementation of this transition to renewables:
1. Do you think Shell is intentionally holding back on the move to cleaner energy sources in order to solidify it’s dominance in the oil & gas industry? Given Shell is a market mover, it can continue to enjoy the cash flow streams from it’s oil & gas business by delaying the industry’s rate of change to renewables.
2. Do you believe the cost of energy can be lower on renewables than current fossil fuels, especially taking into consideration that firms have already invested in power plants that have long operating lives (up to 50 years)? For renewables to truly be scaleable, it should be commercially viable without subsidies. Do you think governments or private investors such as Bill Gates (as Adam mentioned) will need to subsidize the short term switch, especially as these projects are very capital intensive and have long payback periods?