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Very informative read — thank you Charlie. The fact that even the largest businesses like Tesco are suffering under Brexit makes the plight of small- and medium-sized enterprises (SMEs) especially concerning. As you pointed out, large corporations like Tesco have the scale and bargaining power to somewhat shield themselves from the impact of isolationism, namely decreasing purchasing power of its currency and increasing import/export tariffs. However, SMEs do not have the same privileges and as a result will be the group hit hardest by these policies. To make matters worse, SMEs will likely face higher cost of capital and reduced access to banking services. With SMEs accounting for 67% of employment and 58% of gross value [1], the issue is incredibly pervasive to the population as a whole.


Thanks for the great post Amanda! I fully agree that Ford should focus on a long-term strategy rather than reacting to immediate, short-term changes in policy. It was rather surprising that Ford cancelled its $1.6 billion Mexico investment and invested an additional $1.2 billion for domestic factories in order to create 830 jobs. That’s over $3 million investments per job! This reaction to the administration’s isolationist push was especially surprising for two reasons – Ford’s willingness to relocate investments from Mexico to the US given significant cost inefficiencies in doing so, as well as the fast speed at which Ford responded.

On the flip side, it’s great to see the new CEO relocating Focus manufacturing to China while expanding domestic manufacturing for high-profit trucks and SUVs. This is a smart move that allows Ford to address the current administration’s domestic manufacturing concerns as well as improve shareholder value.

On December 1, 2017, Aileen commented on Building the Smart Logistic System for the Future :

Very informative read — thanks Bill! I find it interesting that while e-commerce marketplace by nature is an asset-light business model, top players are now competing on heavy capital investments in infrastructure and digitalization. The benefits of a highly automated supply chain is easy to imagine — an increase in the speed of sorting / picking / packing, coupled with a decrease in the number and types of errors historically caused by human labor. However, with these benefits also come some social cost. Specifically, what will be the fate of warehouse employees (of which Amazon alone has 125,000)? Some argue that in today’s smart warehouses, robots relieve employees of the most physical and repetitive tasks, allowing employees to work on less taxing and more fulfilling jobs [1]. But what will happen when these systems become fully automated?

Lastly, given that the competitive edge in this space is now concentrated in digitalization and automation, both of which are highly capital intensive — do you foresee further consolidation of players in the space?


On November 30, 2017, Aileen commented on “A-Tesla”, Can Elon Musk Revolutionize The Auto Industry? :

Really enjoyed reading this — thank you! It makes sense that primary areas of focus for Tesla should be solidifying a diversified supply chain and lowering battery production costs. With over 400,000 orders of the Model 3 and Tesla’s current production bottlenecks, it is easy to imagine that supply will lag behind demand for at least the next few years. When tied to single source suppliers, Tesla is at their mercy as any issues and delays upstream (which Tesla cannot control) would be rippled throughout Tesla’s business, all the way down to vehicle delivery.

I also agree with you and Levent on batteries — it is crucial for electric vehicle companies to invest in or push forward better battery technology as it is the single biggest driver of cost. In fact, Tesla and their manufacturing partner Panasonic have begun investing massive capital into the battery factory in Reno. To leverage this high fixed cost structure, Tesla needs to drive up demand and thus production volume on their vehicles and other energy products that utilize this battery technology.

On November 30, 2017, Aileen commented on UPS: The rising tide of sustainability :

Thank you for the thorough analysis and great read! As you pointed out, distance travelled is a primary lever UPS can pull to reduce fuel consumption and thus greenhouse emissions. One strategy to reduce average distance travelled is forward deployment. The idea is that if retailers can stock the right products in warehouses that are close to its final customers, shipping distance and time would be greatly reduced. The only player that has done this successfully thus far is Amazon, due its large scale and management’s willingness to heavily invest in infrastructure. Unfortunately most retailers cannot afford to build a warehouse near every major city. One strategy UPS can consider to address this problem is investing in warehouses that can be leased as shared forward deployment centers to smaller retailers. Retailers save on shipping cost by storing inventory in UPS warehouses distributed throughout the country. These savings can be used toward leasing such warehouses, generating a new revenue stream for UPS while helping reduce overall fuel consumption.

One downside of the above recommendation is that building a network of warehouses is capital intensive and takes a long time to complete. A more near term solution could be for UPS to change its pricing structure such that customers are incentivized to minimize distance. For example, UPS could charge a flat rate for trips <100 miles, a higher per mile rate for 100-200 miles, and then an even higher per mile rate for 200+ miles. Currently, the pricing structure is the exact opposite, where customers pay less per mile for longer distance shipments than shorter ones. This scheme may also have the added benefit of attracting customers who are able to minimize distance, giving UPS a competitive advantage in its sustainability efforts (but unfortunately will drive longer trips to competitors and still have the same impact on the environment).

On November 30, 2017, Aileen commented on Sweetgreen: ‘Romaine’-ing Sustainable While Scaling :

Really enjoyed reading about the underlying mission of my favorite salad spot — thank you! As you mentioned, being one of the first to champion sustainable sourcing at large scale means Sweetgreen has to sacrifice a high level of profit and growth in the foreseeable future. This can be concerning as Sweetgreen may never reach enough scale for its sustainable sourcing practices to have a meaningful impact on climate. To mitigate this risk, it may make sense for Sweetgreen to lobby for harsher regulations around restaurant sourcing (potentially alongside other companies with similar missions, such as Starbucks). This strategy has two benefits: 1) it levels the playing field in the space to allow Sweetgreen to compete and grow, and 2) it increases the scale of impact as more players follow the same sourcing practices. Of course, a clear downside of this strategy is that regulation takes years, if not decades, to go into effect. Given that, is there any benefit in being the first mover here? Or will players that follow Sweetgreen’s footsteps benefit from these initial years of costly investments?