I like your assessment of the threat climate change poses to Alta’s business model. What I would like to know more about, though, it how significant Alta’s contribution to climate change is. Further, are the steps Alta is taking to prevent climate change effective? Are the main culprits of climate change being addressed by Alta’s efforts? I am also eager to get your thoughts on how Alta can adapt its supply chain to account for climate change. How viable is the idea of producing more “fake snow” on the mountain? Can Alta change its business model to be less reliant on inputs subject to climate change? Can Alta turn warmer temperatures into a strategic advantage, such as by attracting more visitors for non snow-based activities?
The nationalist sentiment that has engulfed several major global markets seems to largely target foreign companies that export goods to these markets now subject to nationalist policies. I am curious to get your thoughts on how these policies will affect the people they are intended to protect. My experience tells me that nationalist policies are often intended to protect the jobs of domestic workers, but often ignore the impact these policies have on prices passed on to domestic consumers. Can companies like BMW get around the tariffs proposed by global leaders like President Trump by building more plants in target markets (similar to BMW’s Spartanburg plant)? If so, will import tariffs apply to the components assembled in these plants? Does the U.S. economy have the ability to supply these plants with domestically-produced components? Would you recommend that BMW continue to target increasingly isolated economy like the U.S., or should the firm focus its sales efforts on my globalization-friendly markets?
Opendoor appears to be offering a valuable application of digitization in its generation of fair market value estimates of home prices. What concerns me, though, is that fair market value is highly subject to assumptions and transactions often occur at prices other than what one might estimate to be the “fair market price”. Does Opendoor have feedback mechanisms to incorporate actual transaction prices so that it may refine its algorithm? I am also concerned about the company’s strategy, particularly as it relates to its basic operating model. Providing the most accurate estimate of fair market value is an inherently valuable service made possible by advances in digital analytics. However, buying homes and adding those assets to Opendoor’s balance sheet make a software-based business unnecessarily capital-intensive. This also assumes that Opendoor is able to sell the homes for a price that doesn’t create a significant loss. Does Opendoor have a large set of willing buyers who won’t negotiate with the “fair market” price that Opendoor determines? What will happen to Opendoor of the housing market craters and the inventory Opendoor carries on its balance sheet suddenly becomes significantly less valuable? While I agree that Opendoor provides a valuable service and has found a useful way to apply the trend of digitization, I worry that the firm’s operating strategy exposes it to significant, uncontrollable macro risk.
You presented a very interesting view on what the future looks like for Facebook and the top-line revenue potential it presents for small- and medium-sized businesses that utilize the platform. I would challenge you to think through the implications to these small- and medium-sized businesses, as well as the global conglomerates that serve international markets. If small businesses now have access to specific consumers all over the world, can we assume that these customers will buy from small businesses? If so, are consumers and the business better off? In my view global businesses exist largely because tremendous scale is required to serve an international market. If businesses with less scale attempt to serve that market in the same way, they are likely to either lose money delivering the good to the consumer, or they will pass on the increased distribution costs to the consumer. Either way, I would question the sustainability of this supply chain. Further, I suspect that, if small businesses took significant share from large companies, the large companies would respond by acquiring the small businesses, thereby turning them into subsidiaries of large companies. Until we have a way to connect global buyers and sellers in an economically feasible way, I would question the global utility of Facebook as a platform for international small-business commerce.
You noted that you think Boeing’s decision to build defense aircraft in India is a shrewd decision. I am curious to know how you perceive the risks inherent in that strategy. If nationalization is a trend that has led to isolationist trade policies, what risks exist for firms operating in foreign lands? Is there risk that Boeing will face extreme political risk in India if nationalist sentiments come into a position of influence in the nation? What can Boeing do to mitigate this risk? If Boeing substitutes much of its domestic production for foreign production, does that pose a threat to the U.S.’s image on par with buying foreign-made defense equipment?
At the end of your essay, you mentioned that Nestle and other similar companies may be able to help smallholder farmers reduce their reliance on these large CPG companies in terms of technical assistance around increasing land productivity and reducing carbon emissions. While I believe it is in the best interest of these companies to help farmers reduce their contributions to climate change, thereby mitigating supply chain risks, I wonder whether large companies want their suppliers to become more independent. What is Nestle’s incentive to help farmers develop the ability to use land more productively without Nestle’s guidance? If Nestle provides value to its suppliers over and above the value provided when the two entities transact, it has significant leverage to negotiate better terms. However, if suppliers derive less value from Nestle, they are more likely to sell their goods elsewhere. While it would be nice for Nestle to continue to aid in its suppliers’ ongoing development, I question whether this outcome helps Nestle.