Question: Do these efforts truly add value to shareholders and uphold management’s fiduciary responsibility to create shareholder value?
To answer your first question on the impact sustainability efforts have on shareholder value- I absolutely believe they add value and uphold management’s fiduciary responsibilities. These efforts represent an investment in the long term success and sustainability of the business. As stated in the above argument, by 2030 total water usage will be 40% more relative to today . This is a significant increase in water consumption and the company needs to be prepared for the supply shortages that will inevitably take place as we approach 2030 and, as a result, the increase in costs of operations. In order to mitigate against this future risk and maintain shareholder value, it’s imperative for Ecolab to invest in R&D efforts that allow them to minimize water usage and make more sustainable investments.
As Target’s e-commerce grows, does it make sense to further leverage on existing store network causing complication in supply chain or should it rely solely on dedicated fulfillment centers and develop last-mile delivery capability separately?
I really appreciated your perspective on the current challenges facing Target. To address your question, I do not believe that Target should rely solely on dedicated fulfillment centers. While I understand this approach would significantly improve in store inventory management, I believe it would remove Target’s competitive advantage compared to online retailers. I think the physical design approach Target has taken to combat the change in purchasing behavior is one it should double down on while utilizing IoT technology to better manage its supply chain. I believe that the physical presence of the store with a catered offering to the local community will help maintain customer loyalty. If Target continues to rely on RFID’s and other censor based technologies to better inform its inventory and purchasing decisions, I believe they can iterate on their in-store experience to solidify the consumer behavior of stopping at a physical location.
Question: How worried should Nike be about Trump’s threats against China, and what precautions should they take?
I believe it’s in Nike’s best interest to prepare to shift a significant amount of their development operations currently based in Asia back to the States with a heavy focus on automation. I say this for two reasons. The first is to increase their efficiency and supply chain management. Nike’s “manufacturing revolution” cited above shows the impact of automation reducing the timeline for bringing a product to market from 60 days down to 10. If Nike were to shift more of their manufacturing investment to the States with a focus on automation, I believe they would be able to surpass high labor costs and their capex investment over time will pay off as they benefit from higher efficiency. The second reason I think it’s important for Nike to focus on this is because of the potential whiplash of President Trump’s decisions in the risk cited above of China restricting access to American companies.
Question: How will Tesla make energy storage more affordable and accessible? Will it adopt different energy storage technology to achieve this goal?
The adoption of renewable energy by the average consumer on a large scale is one of the biggest hurdles facing the renewables space. The challenge is two-fold- educating consumers on the use of renewables and the impact on cost savings while simultaneously working with energy providers to introduce renewables into the energy grid. To answer your first question, I believe Tesla will have to work on pushing down the price of renewables. This is particularly challenging as SRose stated, the price of raw materials used in renewables has been increasing. I believe they can mitigate this variability in cost by working with regulators to manage the price of these materials int he use of renewables. In the meantime, I believe Tesla can work on capitalizing the ‘conscious consumer’ brand and create marketing to move consumer behavior into this space.
This was a really fascinating read, JoJo. To echo a comment made above, I believe Constellation has accurately predicted the risk of potential tariffs as particularly low given its primary U.S. business status. Even if they face these tariffs, I believe they can build a case for an exception to these tariffs given the origins of the business and the split in their supply chain.
If they’re not able to evade these tariffs, I believe it’s still advantageous enough for them to base their production operations in Mexico and potentially pass on a portion of the tariffs onto their consumers. In Mexico, they can benefit from relatively cheaper labor and raw materials costs which justifies their increased investment in the region. If they were to move their supply chain to the U.S, they would face significant capital investments as well as a long term increase in labor costs. Also, given the loyalty to the brand and the relatively low alternatives (as stated above), I believe that consumers would absorb an increase in costs and continue purchasing the beer.
This was a really great read, Vijay. The increasing trend in the customization of health care is really fascinating as I think about preventative care using data analytics and a better management of self medication. I think CVS has the potential to provide significant value to consumers and supplies. For it’s consumers, I think CVS can help with managing their prescription schedule. With the data CVS has on when prescriptions should be taken, how much, and with what, it could create a system that keeps consumers on track. If CVS were to partner with remote monitoring devices that use sensors to determine whether or not customers have taken their medication, they could launch an app that uses this data to streamline the whole process. In this way, they can signal when re-fills need to be put into the system to match the upcoming demand, ship these through electronic consent, sell this data to insurance providers, and lock in customers to their ecosystem.
Additionally, CVS can use data from wearables and other monitoring devices to determine upcoming demand based on various health metrics. For example, it can signal to providers an increase in cholesterol levels for patients in a certain demographic and predict an upcoming demand for cholesterol medication.
There is significant potential for CVS to remain competitive and increase foothold in the market.