This is a very well written piece and fascinating topic!
As Steve mentioned, I wouldn’t be too worried if I was Airbus. As a company creating jobs in the US and growing relationships with local carriers which are always under serious cost pressure, it would be hard for the DoC to take steps that would be unfavorable to Airbus. On the other hand, Boeing will certainly have a hard time defending itself and asking the regulators to step in preferable policies time and again. It will only get harder for Boeing if it continues down the path of hiding behind the protectionist policies and hiding behind regulations.
In a broader context, considering the fact that in principle companies have been and should be rewarded for innovation and competitive advantages they build, there is certainly a growing threat of isolationism challenging this principle. I can only speculate that companies would have two options ahead of them. First, to take their innovation game to the next level to build expertise that is hard for other players to replicate in local markets. Or, as done by Bombardier, actively pursue the path of developing local partnerships and part with a share of their bottom line to be able to access overseas markets.
That’s a great write up Tom! There has been so much speculation about the true impact of Brexit, and this clearly shows that its ramifications are going to have a significant impact on companies.
Speaking about the impact on relations between the UK and the EU – there is certainly going to be a bitterness that will develop in the political class, which would most likely stem from the local populations expressing discontent arising from impact on jobs and industries. Economically, the rest of the EU largely stands to gain from Brexit with companies moving operations outside of the UK. While there would be organizations adopting the opposite route, they are projected to be the minority. Overall, there wouldn’t be too much impact on the region as a whole, the end result could be minor gains and minor losses for certain markets, most of the angst would come from the period of flux and uncertainty that is expected to arise in the near term.
Specifically for Ford, an optimistic view is that the firm would most likely create a hub for the EU and move operations outside of the UK considering the fact that the larger European market is great than UK alone. A more pessimistic view wherein the firm loses confidence in the direction things are going and believes more such policies might arise in future leading to more isolationism, they would be tempted to consolidate operations in their domestic market or countries similar to China that are highly favorable to outside investments and exports.
Great article Jen!
As Imran mentioned, these are certainly tough questions and while we can speculate how things pan out, only time will tell how customers really react considering unexpected innovations that may appear along the way, in addition to Amazon making long strides into the space.
To answer your question, I feel that while customers will certainly resist the increased costs and potentially affect the bottom line of Walmart, this will only be a limited term impact. There are 2 reasons for this opinion. First, operating with the premise that there will be much stricter regulation governing sustainability at some point in the future, Walmart’s competitors will have to do the same, hence increasing their prices too. In such a scenario, what alternative would Walmart’s customers have? Second, as mentioned by Imran, and in many other sources, sustainability leads to improvements in operating efficiency which would certainly materialize at some stage and mitigate the short term increase in costs.
Great topic JJ! The threat of the world running out of chocolate is one of the gravest challenges facing humanity. The question about how the firm would react in case of things going bad, is really pertinent.
In my opinion, in the unfortunate event of demand exceeding supply, I don’t see Mars conforming to its values and its sustainability standards. Hence, the firm would have no choice but to procure supplies from non-ideal sources and suppliers, at least in the short term. Having said that, it is also understandable that the situation will not occur overnight and the firm would be able to see the unfortunate day coming. This should give it enough runway to pivot on its approach and potentially double down on investments in its sustainability initiatives. In addition, this would also give it the time to communicate and align key stakeholders to set expectations and also prepare re-positioning and PR efforts for the brand. Let’s hope things work out, and the world does not run out of chocolate!
Kudos for picking such a fascinating topic Nick! The essay is super engaging and does a great job of getting the reader excited about the future of retail.
Thoughts on your questions:
1. There are a couple of options Walmart could try here. First, leveraging advanced analytics, they could attempt to store maximum inventory at the back, in storage and display only the minimum required quantities. This will allow them to reduce display floor space and have bigger space behind the scenes to process and ship online orders. Second, they could try scheduling slots during the day when employees would go around picking orders placed up to that point and drop them off in the back for dispatch. This could be done after-hours too in case same-day delivery is not guaranteed. Third, and least effective measure could be use automation and technology to do picking of orders even for the in-store customers wherein walk in customers browse through a digital catalogue of what they are looking for and their goods are brought to them in a minimalistic front space
2. Walmart should potentially pursue both the options. Since innovation in this space is not their core, and there would always be innovators who are fully immersed in building these technologies, Walmart could just buy/acquire these companies or technologies. In addition, it could double down its own innovation efforts to complement and complete the acquired technologies to tailor and build as per its requirements
Great read Andrew! The rising levels of inventory in the fashion industry are an extremely pertinent problem. In response to your questions:
1. Usage of drones: I like the idea of using drones to improve delivery. From a high level, they would reduce the burden on stores to stock up inventory and serve primarily as “trial and browsing locations”. Amazon should be the last option for Adidas considering the large commissions involved, and given the scale of Adidas’s operations it doesn’t make sense for them to serve such a large offering to Amazon on a platter. On the other hand, the risks involved with doing drone deliveries are significant. It is an advanced technology that will require a lot of time and money to build, in addition to the high liabilities often speculated to emerge with the usage of drones. Hence, working with a specialised third party might be the best option. In fact, in due course, the likes of FedEx, DHL, UPS are also expected to offer drone delivery as the future of last mile delivery. Hence, the solution might not be too far out.
2. In principle, certainly there are risks that emerge with eroding economies of scale. However, they might not be as significant if Adidas can attribute potential savings from lowering inventory expenses to push down product prices. In order to mitigate residual risks, it would have to build it’s brand value significantly in order to ensure stickiness. In addition, it would have to deliver superior customer experience with its new delivery offering to be continue differentiating itself.