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On December 1, 2017, BrettonWoods1 commented on Economic Isolationism and America’s Biggest Rival: Canada :

The food and beverage space is a very delicate topic from a governmental perspective because in many ways it is so visible to consumers and touches hot button issues such as health and wellness. I can see the Canadian government viewing a locally owned (and more importantly, Canadian regulated) milk producer as a sort of strategic tool since having some level of domestic food and drink production may one day be critical to survival if international peace breaks down. Canada and others may feel protectionism is thus warranted for select survival-oriented industries and have a tough time giving up such policies even in the face of sound arguments. Moreover, Cayuga’s position as a sub-scale player means they are unlikely to have the lobbying resources or political clout to negotiate against the protectionism in other countries. If Trump does re-cut NAFTA, it would likely prompt protectionist measures in response from other countries, which could even worsen the situation for Cayuga.

Given this, Cayuga may be better served looking to enter other markets such as Latin America and Europe. Their communication strategy could be less tainted by the brewing conflicts that Trump’s negotiations are triggering. Cayuga’s limited resources are best spent looking elsewhere, and perhaps they may uncover even better growth markets that they previously hadn’t appreciated.

On December 1, 2017, BrettonWoods1 commented on Smart Pasta: Barilla’s Digitization of the Food Supply Chain :

I agree completely that IoT is going to be an essential part of the supply chain for Barilla, but I think they need to do more to push suppliers on the urgency of getting IoT into their production. Barilla can, in good faith, discuss why the data will be helpful to all sides, and also offer to share data on Barilla end-customer demand in return as an added incentive for supplier adoption.

Given the value at stake to Barilla, they may want to take a page out of Toyota’s book and actually offer to work with suppliers on how to implement best practices as it relates to IoT installation and digitization. These sorts of gestures can build the trust required amongst suppliers to begin more robust data sharing practices. In the medium-to-long term, Barilla could begin to integrate these data feeds downstream as well to help better align all parts of the value chain (incl. grocery stores / retailers) to fulfill customer demand. Strengthening the lines of communication via digitization and rapid information flows would position Barilla very well to combat some of the food quality and health scare challenges mentioned in the essay.

On December 1, 2017, BrettonWoods1 commented on The New Netflix Challenge :

Content creation is an inherently fickle business since it is fundamentally driven by the media interests of consumers which can change rapidly. This makes the digitization in the supply chain of Netflix inherently challenging since as more of their business becomes content-driven, their business will become more subject to the whims and pressures of consumer interests. I’d imagine Netflix is a uniquely positioned player to compete and win in this new era, however, since their core competency has always been the data-driven approach they bring to media. The same algorithms that recommended to consumers which shows they are likely to enjoy based on their interests and viewing history can also be used to help them predictably architect headline-grabbing content at scale. They should look to aggressively build algorithms to automate portions of the content creation process in their supply chain based on predictive algorithms on meta-data about consumer interests. This approach is particularly attractive given that they arguably have better data than any of the competition, making this a tough-to-replicate strategy that could yield huge returns.

On December 1, 2017, BrettonWoods1 commented on Pass The (Cassava) Beer: Diageo’s Response to Water Scarcity :

My sense is that there is chance for Diageo to really embrace change on the water scarcity front. Millenials are an audience that increasingly cares about the causes they are supporting with their dollars, as well as the sustainability practices of brands they know, so Diageo may be able to capitalize on this while reducing its water consumption footprint. Alternative formulations that are less water-reliant are a great step in the right direction here, but the company needs to begin actively advertising that as a source of competitive differentiation. Being a first mover in addressing water scarcity and putting it on the radar of consumers could yield significant brand loyalty and repeat purchases, which would make it well worth the while of any company.

On December 1, 2017, BrettonWoods1 commented on Is insurance against natural catastrophes sustainable? :

The author poignantly articulated the ways in which climate change could drastically increase the frequency and severity of claims to reinsurance vendors, but it seems to me that the company’s response to these sorts of trends is not nearly enough given their criticality to the business model. The company should do three things from my perspective. First, they should start to sell policies with more adjustable premiums that allow them to change pricing quickly as they get more information on weather events. This dynamic pricing would help the firm via a profit pool buffer with which to offset losses in the event that adverse weather events do materialize. Second, they will likely need to set caps on their coverage and strive for greater portfolio diversity across regions to minimize the impact of individual storms. Finally, they should be on the front lines exchanging data with governmentally and non-governmental agencies to show the severity of climate change and advocating for tougher control policies in all regions.

In general, I would agree that Walmart’s supply chain is at high risk if isolationist policy trends continue, given that a large portion of the company’s competitive advantage stems from globalized procurement and production. However, I actually think there could be a number of silver linings to the company if isolationism takes hold. First, isolationist forces could disproportionately affect low-end “internet only” global vendors that are competing with Walmart on price. Some of these vendors don’t even have physical store locations, just warehouses in cheap locations, so they are able to operate at cost levels comparable to those of Walmart. Since the majority of such players are based in non-U.S. economies, they would be weeded out via isolationism which could reduce the competitive intensity for Walmart. Second, Walmart could use the changes prompted by isolationism to rebrand itself as an American company, bringing jobs back here, which could help boost demand among U.S. shoppers. One key challenge as others have alluded to is that they need to think about the quality of the jobs that would be created if they moved more of their supply chain back to the U.S. since many run the risk of being low-wage, poor working condition roles. Therefore, while likely a net negative for Walmart long-term, isolationism may have some hidden benefits that are being overlooked.