This is a fascinating topic; while I am decidedly beneath HBS standards when it comes to geo-political awareness and knowledge, I would say that relying on a consistent supply of cobalt from China to fuel what should become one of the most profitable and inevitable industries globally is a non-starter. While it is incredibly important for Tesla to “demo” and “kickstart” the electrical transportation revolution, particularly in the US, I think they need to be fully prepared to become more independent from such high-risk regions. I agree with the author the importance of having a fully defined conflict strategy as it relates to the DRC; one possible route of action for Tesla is to use its heft to work directly with DRC government representatives and regulators. While this sounds naive and will prove incredibly challenging due to the relative political instability in the country, the fact remains that as the transportation industry shifts Tesla will be able to provide an incredible value proposition to ensure a steady, ethically sourced supply of cobalt.
I personally am of the opinion that the craft revolution is here to stay, and that rising water prices could be translated successfully to consumers. To a certain degree, I think demand for differentiated beer has become inelastic in response to consumer education and changing preferences, and successful mid-scale craft breweries (e.g., Southern Tier, the pride of the mid-Atlantic Dogfish Head, etc.) can raise prices to more accurately reflect the prices of their inputs. I do however acknowledge the point that these costs will become a barrier to entry, and you may see novelty beer recipes that in the 2000’s would result in a brewery launch be “acquired” by a mid-scale competitor. However, I am most curious about how these increasing input costs will impact the largest growing beer segment, Mexican cervesas, and if rising beer prices will also fuel the growing US liquor demand.
First of all, I want to salute the author for their quote selection throughout the piece. When I think about Disney’s competitive advantage, I think of 1) its basically unmatched level of historic intellectual property, and 2) its ability to acquire new IP and scale it through it’s existing organization and processes, ala Marvel and Star Wars. To that end, I think acquiring or becoming an OTT sits between those two goals; while it allows it to most effectively leverage and profit off of it’s existing IP, it distracts Disney’s (previous) core mission of being a content & ancillary revenue developer. To me, the House of Mouse can use it’s weight to force competition between the various OTT’s for the right to host its content, and obtain favorable agreements without wading into the operational complexities of becoming a technology business (supporting points 2 and 3 as described by the author). As the media landscape becomes increasingly fragmented due to independent studios and web-based content providers, Mickey can focus on keeping his outsized ears to the ground to understand what up-and-coming properties can be spun up into their expertise of scaling brands and negotiating licensing agreements.
I enjoyed the parallels to the IKEA sustainability case in this article. However, unlike our kind and responsible Swedish furniture overlords, I do not believe that McDonald’s will fundamentally alter its business model to deliver the type of climate change impact required. I agree that further regulatory action is required to drive up the price of beef and pass through the true cost of beef consumption on to both beef sellers and consumers. However, I do think that there is also a positive silver lining in that consumers are becoming more educated on the detrimental impacts of red meat overconsumption, and on the environmental impact of cattle farming. According to the WHO organization, US beef consumption peaked in the 1970s, and chicken (a more environmentally preferable meat) consumption has doubled since then. The real greenhouse gas battle will be fought in China, India, and emerging markets in the east as they adopt the “western” trend of heavy meat consumption.
At the risk of outing the true identity of Oswald Cobblepot, I am a lifelong video game enthusiast, and this topic has been bandied around the gaming community quite a bit. This piece does a great job of articulating the major issues; however, I would argue that Gamestop (in its current form) is not just a declining business, its a fish with its head cut off that is still flopping around on the deck. Digitally distributed games will continue to increase as both a percentage of revenue and of volume overall, particularly as mobile is by far the fastest growing segment in the market, and I do not see much of a future for hardcopy games outside of the inordinately and bizarrely popular and ludicrously expensive collectors editions mentioned in the article.
I completely side with the author that Gamestop needs to move to an experiential model that focuses on eSports coverage, gaming trials, and limited “in-person” experiences. Beyond the arcade concept, I think there is an opportunity to partner with the many hardware providers (e.g., Alienware, NVIDIA, Steam, etc.) to provide trial access to upscale gaming rigs and new platforms, which generally require a large amount of time and money to fully experience. As gaming becomes more of a mainstream activity (finally!! so I can talk about it in public more), there is a significant opportunity for GameStop to monetize community experiences and survive the impact of digital distribution.
As the chicken industry marshals its lobbying power at both a national and state level to combat these trade issues, I think it will be interesting to see if and how they try to involve upstream and downstream supply chain entities. On the “upstream” side, some of the most powerful lobbying organizations in the US support the corn and pharmaceutical industries, both of which have firm interests in a healthy US poultry industry. As a specific example, the Boehringer Animal Health business, which can be considered #3 globally, is headquartered in Duluth, GA after the German Boehringer acquired the highly attractive AH company Merial from Sanofi in an asset swap, and benefits greatly from servicing local poultry contracts in both GA and other parts of the Southeast United states. The major consumers of US poultry, such as grocery and fast food chains, also are known for deploying significant capital towards advertising and lobbying. Due to the current state of political regulation in the US, fighting for change requires a lot of money, and Georgia farmers could benefit from developing alliances and joint-action plans with the many entities that they exist in symbiosis with.