This was a great read – really like how you tied in local news with Trump’s anti-partnership with the TPP agreement to how this impacts big companies like GM. I completely agree that it’s a huge risk for GM to have less diversified supplier bases not only across countries but even within countries. And while I think it’s great that GM is opening a supplier park in the US, I also have to wonder how this will impact GM’s profitability in the long term, particularly if this trend continues – given that US labor is more expensive than most other regions. It could also work the other direction too, which brings potentially more worry – if we are not part of this partnership, other companies may move services / jobs outside of the US, and we may too be faced with more import taxes and duties.
Investing in automation is definitely a great long-term investment that will pay dividends, but in the short and medium term I think GM needs to tread carefully to make sure they maintain their competitive advantage while finding ways to diversify their supplier base.
Great post, and definitely alarming to chocolate lovers globally. I like what you’ve outlined as potential opportunities for Hershey to invest in R&D gaps on how to combat the effects of climate change. A few others I had on my mind:
1) Are there other areas in the world outside of West Africa that would also be particularly suitable for growing cocoa beans? It sounds like much of the risk is predicated on our reliance of this area; if there are other areas that we could start to cultivate, it could diversify our exposure to cocoa bean declines with climate change. Particularly if we need hot / humid areas, there could even be some places with warm / humid areas that will grow to be hot with climate change as potential location options
2) I think what TOM1 said above was interesting with respect to finding substitutes for cocoa (like carob); carob already is used in many chocolates and is touted as a more nutritional form of chocolate. I’d be surprised if we could have a broader substitution as people are accustomed to “conventional” chocolate and I think would be wary of this change. However, I do wonder whether there’s a way of making genetically modified cocoa beans that would either a) be more resistant to climate change or b) increase increasing yields.
Really interesting read on Canada Goose – particularly relevant to our class as these jackets are ubiquitous around campus. What I find most interesting is actually that their GTM approach is almost the reverse of other retailers – starting with selling through wholesalers and then opening up their own DTC channels. Hindsight is 20/20, but I wonder if had they used the other approach, and had they been able to build a strong brand reputation, they could have negotiated better contractual agreements with wholesalers and other retailers than they currently have. With that said, it will be interesting to see how channel sales shift over time. I could potentially see the value in some brick & mortar shops – given that this is such a large ticket item, customers will want to see them and try them on in person; however, I am curious how many sales will then ultimately be generated from in-store vs. online.
Love the idea of being able to place an order online instead of having a jacket shown as sold out. However, I’m not sure the Zara or other fast-fashion model works for Canada Goose given their fairly intricate, complex, and high quality makeup. Depending on how automated and efficient jacket production is, jacket production may not be very scalable particularly in a fast manner. This could explain why they need to have a buildup of inventory before each winter season.
Very much agree with the comments above – as an avid and daily Starbucks coffee drinker, I had never considered the effects of climate change on coffee beans. I think the actions Starbucks has taken will absolutely help, but I also wonder how we can sustain coffee bean supply in the long term. Outside of efforts to reduce climate change in and of itself, as well as to produce more resilient crops, I have to wonder if there’s an opportunity for genetically modified coffee beans that could help mitigate the impact of climate change. It looks like there may be already some progress (see this article: https://www.washingtonpost.com/news/speaking-of-science/wp/2014/09/04/genetically-modified-coffee-could-be-just-around-the-corner/?utm_term=.e958f5c95ce8), but I wonder if this could be a longer term solution nuanced to the hybrid seeds you mentioned earlier.
If Starbucks wants to put an emphasis on energy conservation, I think there’s also more they can do within their existing operations to support this effort – things like bigger incentives to use reusable cups. If we think about how many paper cups daily coffee drinkers go through and the energy required to dispose of these, it’s a crazy high amount – and if everyone put more effort into being sustainable coffee drinkers we could potentially substantially increase the life of our precious coffee.
Interesting read – and not altogether surprising that Macy’s is falling victim to the same trend of retailers (like JC Penney, Sears) closing down brick and mortar locations. What I would be curious to know more about is how much of Macy’s sales are lost to other eCommerce retailers (e.g., Amazon) vs. a shift in sales to Macy’s eCommerce website. If it’s the latter, then I agree that shifting to and embracing an omnichannel strategy is the way to survive, and that selling their real estate holdings would be a good way to free up capital (also could make sense since real estate isn’t Macy’s core competency; could also increase some of their financial ratio performance like ROA – similar to the FRC Target case). If, however, Macy’s sales are primarily being lost to Amazon, then I’d have to wonder how much these value-added services can function to draw customers back into the store. How do customers value convenience vs. value-added services? Have we seen any best-in-class examples of big retailers who have made this transition well? And what lessons could we learn from them?