Great article Darius! I would add that a major concern for manufacturing companies operating in the UK is how to hire and retain its labour force in the context of stricter changes to immigration policy and border controls. It’s still unknown the impact that Brexit will have on EU migrants working in the UK, but additional visa requirements could lead to hire administrative costs squeezing the already low margins of paper manufacturers.
I agree with you that relocating the manufacturing operations to lower cost countries might be a good play, particularly since some EU countries might compete to attract companies fleeing from the UK (we have already witnessed this competition between Dublin, Madrid and Paris to attract some banking positions leaving London). Nonetheless, I am not sure if it’s not a bit too early to commit to such a radical move in light of the uncertainty surrounding how Brexit will play out.
Great article John Smith! To Mohamad’s point, in the medium to long-term protectionist measures by the Trump administration will shelter inefficient American companies and take the pressure off of them to innovate and find new ways to satisfy consumers. This means that overall the US economy, built upon R&D and technology developments, can become weaker.
Furthermore, protectionist measures by Trump may generate retaliation by foreign countries limiting the global market for American companies. Lower sales would naturally result in layoffs contributing to unemployment which was exactly what Trump intends to fight in the first place. Hence, I am not entirely sure that Trump will act upon his threats. Nonetheless, I fully agree with EL when he says that companies need to have risk management policies in place to be able to cope with political but also environmental and exchange rate risk.
Alejandro, thanks for the great read. Although I agree that in the medium to long-term self-driving trucks can improve safety on the roads, on the short-term the number of accidents can be higher until drivers learn how to work with the technology properly and understand its limitations (e.g., does it work with extreme weather?). This is particularly relevant as sellers of self-driving cars tend to highlight what the cars can do and not what they can not do.
The point above also poses challenges for related industries. In case of an accident who will be liable? The self-driving car company or the driver? How will insurance companies price the insurance for these cars and who will pay for it? In my opinion, these are questions that need to be answered before self-driving cars gain considerable traction.
Very interesting read MRA! To your point related to the importance of the store experience to build a brand, I would highlight that digital tools not only enable alternative distribution channels (such as direct to consumer sales via online), but can also enhance the shopping experience inside the physical stores. As an example, look at the smart beacon technology that allows retailers to send personalized messages to consumers within 50 meters of their stores. This technology allows retailers to not only invite customers passing by to enter the stores by offering them personalized discounts but also allows retailers to instantaneously share more information about the products displayed in store.
Additionally, some retailers have introduced digital kiosks in their physical stores that allow customers to order products online in case the item is sold out in that particular store.
All in all, I reckon that retailers should not look at digital tools as a replacement of physical stores but as tools that allow them to optimize the in-store experience.
Very interesting read Megan. To Pratik’s point, I don´t think it is cost-effective for Amazon to check the sustainability practices of all of its marketplace players. As we saw on Ikea’s case, simply defining what those standards are for a single input (wood) is an herculean and resource-heavy task. Nonetheless, I think that Amazon should provide online buyers with as much readily-available information as possible concerning the suppliers they are buying from. In this sense, Amazon could display on its website sustainability ratings created by third parties (such as Sustainalytics, whose ratings are used by Morningstar to evaluate mutual funds and ETFs on sustainability practices) for each of its market place suppliers. I reckon that this could be a good compromise between promoting sustainability and being cost conscious in a company with thin margins and still investing a lot in growing its business.
Additionally, I agree with you that Amazon’s business model promotes consumer behavior that to some extent harms the environment – Amazon Prime’s free shipping feature does not provide incentives for customers to concentrate purchases and consequently decrease the pollution arising from several shipping runs. I think there could be some cost-effective ways to mitigate this effect, such as providing “sustainability points” to customers that choose to ship more than X products together. These points could then be redeemed in selected items.
Great article Michelle. I find your point on Mars’ need to diversify its product portfolio to rely less on cocoa particularly relevant in light of the investments made by food giants on startups specialized in “alternative manufacturing”. As an example, in 2016, Tyson Foods acquired a 5% stake of Beyond Meat, a startup focused on replacing animal products / proteins with plant-based alternatives to promote environmental sustainability. Their flagship product, a 100% plant-based hamburger, has been praised by the media for its juiciness, tenderness and flavor that seem to truly resemble that of real beef. Similarly, in August 2017, Impossible Foods (a competitor of Beyond Meat) raised $75 M from investors, including Bill Gates. I wonder if we will see similar R&D / investments in startups to discover suitable low-cost replacements for chocolate driven both by environmental concerns and economics arguments as cocoa becomes harder to source. A key challenge will be how to communicate and advertise those products to consumers when authenticity seems to be highly valued.