Great article. Banning the use of foreign exchange as a mechanism for building its local manufacturing capability makes sense in theory; in order to become competitive on a global scale (and Nigeria was, at one time, one of the world’s largest producers of palm oil), there needs to be some sort of impetus to drive investment to the country. Such policies can successfully encourage needed investments in infrastructure and improved coordination between different players in the local economy.
A key risk here is that a holistic approach is not taken, as this sort of policy requires parallel development of local capabilities to promote local value creation and not have negative ripple effects across industries, as some commenters have alluded to above. Nonetheless, while there are certainly some short- and medium-term risks associated with taking such a ‘bold strokes’ approach to shifting Nigeria’s balance of trade, long-term benefits may still come Nigeria’s way by fostering demand for domestic goods and expanding its productive capacity.
I think you’ve raised an interesting point – that is, how much should companies kowtow to the demands of the eco-conscious consumer? I would agree that not all people are as sensitive to environmental or sustainability concerns when making their purchasing decisions. Having said that, what is the ‘inflection point’ at which companies must start to shift their business and operating models to reflect these demands? Would it not be more prudent to shift their supply chains now, to prepare for the eventuality that the bulk of their customer base will begin to care?
It would be rational for a company that’s existed as long as McDonald’s to think through how it can mitigate the impact of climate change, given it will inevitably be detrimental to their supply chain (and their bottom line) in the long run. While it’s true that the bulk of their customers do not care about the environmental effects of their beef consumption, one could argue that people will probably begin to care, with time. It’s probably not likely that a multinational fast-food behemoth can shift consumer behavior towards reduced beef consumption, it is wise to shift their core offering (and/or have an alternative solution ready) for when customer demand shifts on its own.
You referenced some of the lobbying efforts that JLR can engage in, which makes sense – in theory, given the impact Brexit is likely to have on both the production and sale of JLR’s goods, they should focus their efforts on ensuring the UK government can get them the best deal possible for carmakers.
Having said that, the vast majority of UK businesses (including JLR), would almost certainly prefer it if the UK stayed in the single market. However, the issue with this is that the UK would need to also continue to accept freedom of movement, which could be seen as a cardinal sin by many of the Conservative government’s core voters (and by much of its own backbench) who supported Brexit. The EU is sticking in its heels, insistent that a ‘divorce settlement’ needs to be agreed and paid first before the specifics of a trade deal can be discussed (the EU has asked for £53 billion to cover Britain’s financial obligations; Theresa May has since countered with £40 billion).
Appealing to the EU for low or no tariffs would almost certainly be a lost cause, not just because of influential German carmakers, but a whole swathe across the continent (e.g. Renault in France; Fiat in Italy, production facilities in central & eastern Europe, etc.). It is possible that they will not be amenable to making concessions, pushing for tariffs on UK produced vehicles, leaving JLR over the barrel.
It’s likely that your suggestion (for JLR to relocate and divest from its UK operations) is its best solution. (well, except for selling to people in Britain!)
Great suggestion. This actually reminds me of a platform that other retailers are using to do exactly what you’ve suggested – offer personalized fit suggestions to increase customer satisfaction, reduce returns and drive repeat visits to / incremental revenue for the retailer. “True Fit”, a data-driven personalization platform, uses data points from thousands of brands (re: dimensions, style attributes) and millions of users (re: their body shape, measurements, and their favourite brands that fit them well) to offer customers an informed view of what items would fit well and in what size. I’ve used “True Fit” on House of Fraser’s online store with great success, and wonder if RTR is better served leveraging an established platform’s network effects.
One concept you alluded to at the start of your article is trust – specifically, the role of the auditor in creating and instilling trust. It seems to be taken as a given that blockchain will ultimately eliminate the need for intermediaries, simply because its decentralized nature has many deeming it sufficiently trustworthy.
Messi alluded to “people” being central to detecting and correcting breaches; I would argue that it is less about people or any one person, but, rather, a trusted central authority. This is the same reason why certain currencies are more stable and generally preferred for use in global markets (e.g. the USD) over other, more volatile currencies: people need to be able to appeal to a trusted central authority if the system fails. If people lose trust in the authority overseeing the currency and/or their ability to effectively govern / intervene, they will try to sell it off, leading to capital flight, currency devaluation, and hyperinflation. The same applies to blockchain.
(Fascinating proof point: the mere rumour of its founder’s death sent stock of Ethereum – a blockchain-based decentralised platform – plummeting: https://qz.com/1014559/vitalik-buterin-dead-a-hoax-on-4chan-crashed-ethereums-price/ )