Arthur Dief's Profile

Helen – I wonder if Marmite, and other “unique” products without close substitutes, will be disproportionately affected by protectionist policies. Products that are easily replaced by other items would not have endured a “price war” with Tesco and the distinctive nature of Marmite and the ubiquitous Tesco serve as symbolic and iconic brands for the UK in particular. Both Unilever and Tesco may feel extreme pressure to protect the standing of their respective brands given the global attention.

To address your question about supermarkets facing grim exchange rates, I believe it will rely on cost savings in other business areas. There may be a shakeout of inefficient grocery chains and sophisticated and efficient supermarkets may remain in future years. Last month, the Tesco CEO postulated that Brexit will not cause mass disruption for his supermarket chain because of his superior supply chain and focus on cost cutting to offset currency impact [1] Of course, it is in his best interest to claim that Tesco will not accept inferior quality at its stores on account of Brexit, and only time will show the impact of negotiations regarding Brexit terms on grocery stores.

[1] Williams-Grut, Oscar. Tesco CEO: Ex-Sainsbury boss is wrong on Brexit — but ‘no deal’ could push up food prices. Business Insider. http://www.businessinsider.com/tesco-ceo-dave-lewis-brexit-supermarkets-food-prices-2017-10

Alex – This article raises some important questions about the very long term impacts of protectionism on the future of brands made internationally. First, the risk of protectionist policies change with the global political climate, and so an extreme reaction from companies (i.e. acquiring new plants or sub-brands as you mentioned) may always get whipsawed, one step behind and lagging the current political environment. While NAFTA does create cause for concern, Constellation may still be too reactive in its investment and divestment of operations in different locations instead may want to employ more muted strategies to hedge the risk of isolationist policies.

In the very long term, if isolationism does persist as a prevailing global political view for a long time, I wonder if we will see fewer brands proudly promote “Made in Mexico” or other similar countries as tastes shift. Perhaps American consumers will no longer prefer French wine or Italian pasta and preferences will align with nationalist sentiment. Some companies already promote their items as “Made in America” to appeal to patriotic consumers and may lead the way in this trend, considering that most customers already prefer items to be made here anyway. [1]

[1] Consumer Reports. https://www.consumerreports.org/cro/magazine/2015/05/made-in-america/index.htm

Ferrero, is in an interesting position to use sustainability to its advantage and align it with Ferrero’s strategic goals. As you mentioned, the company is already chartering sustainable practices in farming using its “Ferrero Palm Oil Charter” and so should use this as a marketing tactic offensively (instead of just defending its use of palm oil when faced with criticism). You made the point that Ferrero could communicate this to customers better, but I think Ferrero could even criticize competitors’ use of palm oil irresponsibly to further maximize the marketing potential inherent in its use of sustainable practices.

Ferrero could also use its own “nursery farms” for hazelnut growth to combat the long-term impact of global warming. As its competitors become susceptible to natural disasters and climate swings, utilizing a greenhouse or nursery could hedge against risks as other chocolatier’s face them with frequency. Perhaps Ferrero could also invest in storing or adding preservatives to hazelnuts so that they are even less impacted by the increased weather changes and natural disasters associated with climate change. As long as Ferrero can extricate itself from the stressors that its competitors face due to global warming, it can continue to maintain its competitive advantage and mitigate the effects of global warming on its supply chain and overall business.

Anmol – One risk that natural disasters also pose for hospitals is destruction of patient information and personal records. The problem of climate change for a hospital is then magnified as they become liable for not just the patients in the hospital, but any patient whose records are on file. Digitized patient medical records on internal servers in basement could certainly be destroyed, but many hospitals still keep paper records on file, which may be a more imminent concern.

I think you raise an interesting point about hospitals having a responsibility to address their global emissions, just like any other industry. However, it may be difficult to convince hospitals to update and change environmental practices to better serve long-term goals of reducing climate change. As you suggest, hospitals may see this as an investment in their long-term viability, but many other threats may seem just as worthy. Terrorism and online hackers pose similar threats to natural disasters caused by climate change and so a hospital may not see the incentive to combat climate change when these other risks loom large. Policymakers may have to impose environmental regulations to improve greenhouse emissions from hospitals, if it is deemed critical for society.

Steve – Given the market dynamics and trends you described, I wonder if Gap Inc should even continue to operate Gap or Banana Republic brands. At the low end of price and quality, Old Navy can implement fast fashion and compete effectively with Zara using supply chain improvements through digitization. However, these supply chain improvements are predicated on the brand being responsive to its customers and then speedily impacting its supply – which may not be aligned with the brand goals of Gap or Banana Republic. Instead, perhaps the higher end brands, Gap and BR, should utilize a creative director and operate a different business model by not responding to customer demands, but rather creating “fashion” and allowing the customers to follow. I am not certain that Gap Inc should operate both distinct business models and may want to use its scale to continue to operate in fast fashion (as it has done with Old Navy) and sell the high-end portions of the business that may work better with an alternate model. Given the recent performance, Gap and BR certainly don’t seem to be working now.

Brandlesswriter, I am so glad you decided to write about this company! Brandless has tapped into a fundamental trend in our society that has been brewing in recent years. Even in religion and jobs, loyalty to particular “brands” is waning throughout our culture – adults who identify as atheist or agnostic constitute 23% of the US population today and the US Bureau of Labor Statistics projects that 60 million people (or 40% of the total workforce) working for themselves by 2020. (1) There is a fundamental shift away from brands and toward “newness” and “change” in the information age.

Your prescription for Brandless’ strategy entails actively moving the business beyond the millenial consumer through alternate channels (i.e. Target), but I wonder about Target’s willingness to carry Brandless products in its stores. Target currently benefits from branded CPG products actively fighting for shelf and display space and moving to a “commoditized” CPG industry reduces margins for Target. I can see how this suggestion may work in the long run however, as Target may benefit from consumers tastes shifting to store brands and may demand Target-branded products as “brandless” shopping becomes normalized and popular.

(1) Kusek, Kathleen. The Death Of Brand Loyalty: Cultural Shifts Mean It’s Gone Forever. Forbes. https://www.forbes.com/sites/kathleenkusek/2016/07/25/the-death-of-brand-loyalty-cultural-shifts-mean-its-gone-forever/2/#4e73e06f39df