AJ's Profile

Dan,

Brexit will undoubtedly have a significant impact on many UK companies, particularly those like ABF that sell commodity goods and grocery products. I think the challenge for ABF is even greater than for other companies because of the nature of the goods they are selling – many consumers of grocery products are highly price sensitive (especially for items like bread), and demand can drastically diminish given even the slightest increase in price. Therefore, to mitigate these pricing risks, it is important for ABF to search for new customers within the UK in order to avoid the implications of Brexit. This may require ABF to work with smaller, independent customers who order less volume, forcing ABF to rethink and redesign its distribution and/or manufacturing processes. This may require building more warehouses, hiring more sales people, and/or strengthening its distributor relationships in order to reach this new customer base and expand its market within the UK. Thinking more internationally, I do believe that influential corporations should work with national and foreign governments to create a regulatory environment that benefits both parties. ABF needs to focus on these efforts given the highly politicized nature of Brexit and its implications on cross-border trade.

Carolina,

It was refreshing to read a post in which a company has successfully implemented changes in its operations that have somewhat mitigated climate change risks. It seems the company has taken the time to really understand its operational challenges and has developed innovative solutions around those challenges (i.e. the drip irrigation system). However, I believe the company can do more to think about its growth strategy and defense mechanisms to climate change. For example, the company can consider establishing a joint venture or acquiring a small international competitor in order to expand its operations without investing significant capital in expanding its own operations. It could also consider strengthening its sales and marketing teams to better serve its current customers and acquire new customers. Additionally, as you mentioned, it should continue to invest in olive tree R&D to develop strains that are resistant to climate change and can produce a quality of product equal to what is being sold today.

SEA,

This post gave me a lot of anxiety – I cannot imagine a world without Starbucks coffee! Kidding aside, climate change is a topic that consistently frustrates me, as it is something that should absolutely be more proactively dealt with than it is today. Although you have listed many ways in which Starbucks is “collaborating” with its supply chain to deal with the potential side effects of climate change, I think these changes are still more PR-related than actually being effective for long-term success. If Starbucks was serious about mitigating the risks of climate change to its business (in addition to just being a responsible corporation), it should continue investing in new strains of coffee that are more weather resistant. It should consider buying out current farmers who are less sophisticated in their coffee production capabilities than Starbucks would be with its resources and use their land to grow these new strains of coffee using environmentally friendly processes. It should also collaborate with other coffee companies to create industry standards that everyone must adhere to.

DC,

As the beginning of your post alluded to, the industries that companies like ArccelorMittal compete in are highly dependent on the political climate. Significant uncertainty can be created based on the swings in political elections. For this reason, I think it is important for the company to strengthen its current relationships with its customers, lock in long term contracts with new customers, and expand into other service offerings in order to have some downside protection to these political risks. It can strengthen its relationships with customers by building on its supply now when it still has strong forecasts on their consumer behavior. It can lock in long term contracts with new customers by utilizing a strong sales team and highlighting its customer promises more effectively (since it is the dominant player, this may be easier to do than for other smaller competitors). And it can diversify its operations by finding ancillary revenue sources from its main steel operations – i.e. how can it maybe put its waste or scrap metal to use more effectively and open a new market for itself?

LoveforBrands,
I always find it fascinating to discuss whether behemoth corporations like P&G should change what they are doing to stay successful given changing times, or whether they should weather the storm and keep doing what they do best given that’s how they became one of the most renowned CPG companies today. Although on a surface level I agree P&G should become a retailer to more effectively compete in the direct-to-consumer environment, I believe this is totally unfeasible. This isn’t a matter of simply changing business strategies – it is fundamentally changing what P&G is as a company, and the time and financial cost of implementing the processes necessary to become a retailer would not be worth it. First of all, to own the last-mile delivery service and redesign their distribution and warehousing network to have the proper flow of inventory requires significant capital investment and operational change. Yet, even after implementing this change, they are essentially trying to become another Amazon – which we all know by now is probably a bad idea. Instead, P&G should consider acquiring companies that specialize in the Direct-to-Consumer business (similar to Unilever acquiring Dollar Shave Club) given it has significant assets on its balance sheet to be able to absorb these acquisitions and the processes are already in place to succeed and they can maintain their core business operations.

PJ,
This is a very interesting take on digitalization within the supply chain. I feel like we do not have to argue against the success of the Netflixes, YouTubes, and Hulus of the world. It is clear that over-the-top digital entertainment platforms have been able to utilize big data and consumer behavior to better predict which shows and movies will resonate based on the consistent growth in both revenues and subscribers these platforms have exhibited.

I understand the concern you posited about the lead times of movies and TV shows, and that although you know what consumers find interesting now, does this necessarily mean after 18 months of production this will still resonate? I would argue that the case for entertainment is extremely different than predicting fashion trends (i.e. the Gap case that you mentioned). Entertainment is somewhat timeless and does not succumb to seasonal trends in the way fashion does – that is why people still love the classic movies and TV shows. What the data predicts today about what viewers want to see will still hold true 18 months from now after production wraps, and for this reason I think it is absolutely critical for all movie studios and production companies to adopt the digital Netflix/Hulu model in order to track viewer behavior more effectively.