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On December 1, 2017, Boston379 commented on Does a Trump presidency mean fewer free t-shirts? :

Brian’s article raises interesting questions on the impact of isolationist policy on t-shirt distribution and pricing for Gildan. It is clear the company faces significant risk given its supply chain exposure to international markets that could potentially be affected by new policies under the Trump administration.

I am particularly intrigued by the local, vertical integration proposition Brian raises at the end of the article. Of all the proposed countermeasures to isolationist policy, this seems the most “bullet-proof.” At the same time, I would also expect it to be extremely expensive for the company, as it represents a structural overhaul of major processes. As a shareholder, I would be eager to learn more about how Gildan prices the risk associated with policies that potentially damage the company’s operations, and would want to evaluate the costs of an aggressive strategy such as local, vertical integration against this priced risk to make a more informed decision. If the company competes on price and has major exposure to policies that could threaten this competitive advantage and, in turn, lower its market share, management could potentially justify paying a premium to make a major supply chain overhaul.

Jordan raises important questions in her assessment of isolationist policies’ potential impact on Walmart, which relies heavily on foreign labor and goods to operate its business successfully.

While there are certainly risks associated with isolationist policy that may require Walmart to invest more in American employees, it seems unlikely that the company would have an incentive to take aggressive action until it is legally forced to do so. Walmart competes against other big-box retailers on the dimension of pricing, so it is disincentivized to be an early mover in hedging this isolationism risk.

Further, if the company believes Trump’s presidency will only last one term and his policies are not likely to endure, the board could make the case that taking action today would be too short-sighted. It may be wiser to focus on the long-term.

Lily raises important issues around climate change’s potential impact on Pinnacle and the company’s ability to respond. I commend Pinnacle’s efforts to improve their own environmental impact and see the brand and social value in doing so, but agree with “Mel Searches'” assertion that these will hardly move the needle on the actual problem.

Pinnacle would be wise to begin hedging against climate change risk for its core businesses over the long term. One approach might be investing more aggressively in R&D and consumer education around foods that are less susceptible to these climate change issues. Figure 1 shows variation in response to climate change across different crops, suggesting that some may be more likely to endure than others. If Pinnacle can get ahead of the trend by shifting its product mix and educating consumers, it may be better positioned for the future.

Tesco should be applauded for its recent steps in combating climate change. The author’s question of whether a focus on seasonal purchasing (vs. year-round variety) could make sense is worth further consideration.

The intuitive economic answer for grocery stores is to provide as much variety as possible to consumers, year-round, to the extent that there is demand for it. But it may be worth testing this theory with a focused marketing campaign around food seasonality and the environmental benefits of purchasing produce only when it is in-season. Testing such a campaign at small-scale in a few stores would likely be cheap, and may produce surprising results. Would environmentally conscious consumers value such a corporate decision enough that they could be swayed to shop at Tesco because of it? If so, adjusting to a seasonal produce strategy could actually yield new, more loyal customers who previously didn’t consider Tesco. It is worth running this experiment and doing a controlled cost-benefit analysis; while the industry has historically pandered to demand for breadth, it is possible that Tesco could actually discover an economic case for shifting to a different model in an era of environmentally-conscious consumers.

On December 1, 2017, Boston379 commented on Major League Baseball: A Leader in Live Content Distribution :

I enjoyed the author’s article on how OTT streaming services challenge the traditional TV supply chain, and was amazed to learn about how successful BAM has been. The “response from cable networks” is an important question worth further consideration:

The contrarian view, that cable companies are actually well-positioned to overcome what seems like a threat from OTT, is worth exploring further. While new entrants like BAM have beaten cable networks to market with superior OTT streaming technology, there is a strong economic value-driven case to be made that cable networks will win out in the long run. Their control of last-mile distribution to the consumer, massive scale, and expertise in bundling are extremely powerful competitive levers and position them to satisfy the needs of the vast majority of the market. Today, “single-channel” OTT products provide a clear value proposition to consumers who want to selectively buy only a small slice of media content, but the market for bundled media products is proven to be enormous and offers more compelling economics to the average consumer, who actually saves money vs. un-bundled equivalent services on a per-service basis. Generally, un-bundling only benefits consumers from a price standpoint to the extent that they only purchase a few un-bundled products. But as long as consumers value purchasing a few different kinds of media, cable companies will be able to offer more attractive bundled economics for their own competing service (whether delivered via linear TV or their own digital streaming product) than will single-channel OTT players. See HBS alumnus and VC Chris Dixon’s writing on bundling economics for more:

On November 30, 2017, Boston379 commented on Diamonds Are Forever…But Their Supply Chains Are Not :

I believe the trade-off question of developing a blockchain in-house or via some kind of shared effort is a critical one, and suggest that a “shared effort” system built on top of a large, existing public blockchain (e.g. Ethereum) makes the most sense for participants in the diamond industry.

Building and monitoring a new, independent blockchain can be expensive and time consuming, especially for companies that lack the requisite technical expertise and have to rely on third-parties (almost a certainty for companies in the diamond business).

Implementing a system on top of a large, public blockchain, such as Ethereum, will be cheaper because companies can leverage existing development standards and infrastructure. But perhaps most importantly, it will also increase the blockchain’s security, which is key for a blockchain whose purpose is to reflect the legitimate exchange of assets that have a high monetary value, such as diamonds. This blockchain would be a likely target for bad actors. The Ethereum network’s enormous scale and computational mining power makes it virtually impossible (too expensive) to hack (at the network level – endpoint security and credential management are still the responsibility of the client). This means the transaction immutability property of its blockchain is stronger than that of smaller alternatives.

The original Bitcoin whitepaper provides further explanation of proof-of-work, or how computational power enforces public blockchains’ immutability.