Great essay Lynn and a very relevant topic nowadays. I think the question you pose about whether tariffs would have been placed under a different administration is a good one. In my opinion I think they would have been implemented, given the relationships governments have with their domestic airplane manufacturers and how much protection and funding they provide to them.
To be clear, I agree that markets should allow competition, but the aerospace industry seems to be operate somewhat differently given that all OEM’s are directly or indirectly subsidized by their governments. If this was not the case, I would be more inclined to accept the argument that free competition should be allowed. However, if the aerospace industry operated without government subsidies, would Airbus and Bombardier even exist given how they have been bailed out multiple times by the EU and the Canadian government respectively? It is a difficult conversation to have, and relationships amongst governments must be taken into account when having them.
I am inclined to agree that Boeing maybe lobbied for tariffs that were too high/unrealistic. At the same time I would post the question of what else could they have done when competing against companies that aren’t concerned with turning a profit and can just dump their prices to enter new markets?
Personally, I think Nike should continue to move to high-tech fibers for producing their apparel. This would allow it to better manage its supply chain and de-risk its overall business by depending less on cotton which is inherently more volatile. In terms of how the general public will perceive these high-tech fiber products, I think they will be received quite well. The public’s perception around climate change and the role companies play in sustainability has drastically changed over the past few years. Consumers expect companies to deliver the same product and service while being more sustainable and having smaller effects on the environment. If Nike can deliver on the sustainability front, I think it could be a major differentiator from its competitors. My only concern is whether Nike and its supply chain can scale the technology to deliver more sustainable products at a competitive price. While in theory it would be positive to make all products more sustainable, sometimes it is simply unrealistic because the technology or manufacturing process can’t scale effectively. If Nike can successfully implement high-tech fibers without disrupting their supply chain I believe they would reap the benefits of a more sustainable product in a more environmentally friendly society.
This essay was very interesting. It reminded me of the Donner and United Inc cases, where the protagonist company was in between two different business models. I think in this case it would be dangerous for Cummins to lose sight of their diesel engine business and start focusing too much on the electric engine issue. My recommendation is they should look to acquire a company with a proven concept in this technology while continue to focus and execute on their core business. At the same time they could try to provide operational efficiencies and scale to the acquired company by giving them a greater purchasing power and influence with global suppliers.
In line with this, I would stay away from developing the technology myself. This is outside of Cummins’ core competencies and I would be worried that they would lose focus and miss their execution targets on both sides of the business.
Great essay Ailin! I agree with you that it is critical to start engaging 2nd tier suppliers within the value chain to further mitigate risk. I think a key way that organizations are addressing the issue is by having representatives at all companies within the supply chain. However, I believe that these representatives do not have enough power within the supplier organizations to actually have an impact on operations. I think it is critical that these representatives be empowered in order to successfully mitigate risk and produce more efficient supply chains. For example Boeing has partnered with regulators to have in house FAA representatives that are paid Boeing employees. This helps operational efficiencies and allows Boeing to manufacture a higher number of airplanes. I could envision a similar system where BMW has a set of company representatives at every supplier to manage risk.
I agree with Edwards above that this is a timely topic. At this time blockchain technology is in the early stages of its life and many companies including Walmart are in the midst of figuring out how to apply it to their business. However, I think this is were Walmart should rely on emerging companies within the blockchain space to develop solutions for them, as opposed to entering a field that is not within their core competencies. I think the partnership with IBM is powerful, but Walmart should also look into investing into start-up companies within the blockchain community that are working on solving supply chain issues. In the short term, as Edwards suggested, I would recommend Walmart focus on leveraging existing solutions to tackle some of their current problems. While I agree that blockchain is the future and Walmart is being proactive by paying attention to it, I think there is technology out there that they could apply today to solve some of their supply chain problems.
This is an amazing essay Rhonda. I have a couple of points I would like to make in terms of protectionism and Boeing’s role when it comes to U.S. policy. I completely agree that Boeing should try to manufacture in emerging markets and as you mentioned they recently opened a completion center in China in order to show good faith and more effectively compete for market share in this space. However, the interesting balance here is how does Boeing protect it’s intellectual property from a government that is desperately trying to build it’s own commercial airplane as quickly as possible and eliminate foreign players from its market?
In terms of protectionist policies and the role Boeing must play, I find this topic more debatable. A look to the past shows as that McDonald Douglas, an American OEM, disappeared once Airbus was able to successfully enter the market. Airbus ultimately outcompeted Douglas on price due to its government subsidies. Given that now Boeing and Airbus are interlocked in a battle for market share on a global should the governments of both of these OEM’s be worried by the emergence of new entrants such as Bombardier and Comac? Could one of these new entrants potentially replace Boeing or Airbus?