Cindy Ju's Profile
Great read! I agree that the use of financial hedging instruments will help to mitigate the rising cost of ingredients for Cadbury, and was the first solution that came to mind when I read your article. However, I think other ways that Cadbury can exercise cost containment and preserve the “British heritage” without moving manufacturing overseas is to innovate around alternative products that use cheaper or less raw materials. For example, you mentioned in your article that the price of cocoa has skyrocketed by 50% since 2013. What would be the effect of substituting ingredients like chocolate with more caramel? What about decreasing the size of the chocolate bars? I think there are changes Cadbury can make to its products to sustain its profits. Additionally, while I admire efforts by the company to engage in fair trade standards for cocoa, I think that in the wake of Brexit and isolationist policy, perhaps it would be wise to cut back on spending on “do good” initiatives? The company invested 45 million pounds in to Fair Trade chocolate , but cutting back on sourcing these expensive raw materials may be a wiser move.
Thanks for the interesting read! This article reminded me a lot of the Sustainability at IKEA case that we did in class, and in particular, I am confused as to why Starbucks doesn’t own more farms. We talked about how vertical integration of the supply chain would allow IKEA to preserve forest/lumber, which is as much a profit-driving reason as it is an environmental consciousness reason. You mentioned that Starbucks purchased its Costa Rica farm in 2013, but my understanding is that the farm is primarily used for research purposes to figure out if there are more weather and fungus resistant strains of coffee that can be developed, in essence, it serves as a research laboratory . My question is why they don’t just purchase farms to own the upstream? This would decrease Starbucks’ susceptibility to influx in coffee bean yields, and allow them to have greater control over the whole supply chain from plant to drink. I would imagine they are spending just as much in educating and getting their partner farms to change their practices.
Interesting read! In my previous job, we also invested in a large meat processor, JBS S.A., headquartered in Brazil with market capitalization of $7 billion. Agreed that it would be awesome if Tyson became the next Amazon of meat-processing in its ability to have hands in all aspects of the supply chain/farms and also have insight in to customer demand. However, one point I would like to raise is the fact that there are still many areas of meat-processing factories themselves that can benefit from digitization. I was surprised in my last site visit to a meat-processing facility how manual the process is, with lines of workers hacking away at cutting out parts of the meat. These labor costs are undoubtedly, high. To answer your questions, I think that one of the ways that AI can play a role in meat-processing is to replace parts of the manual labor, not just using AI for data analytics. For example, JBS has been investing in technology for deboning, packaging, and also machines that can take a picture of the meat and can immediately tell how lean the cut is (ie: 80% lean, 20% fat) which replaces the human eye. These technologies help companies like Tyson realize immediate cost benefits and efficiencies within their plants, so they don’t face the issue you posed of having to make these investments at the expense of short-term profits, because these advancements are immediately synergistic to the plants . In terms of completely reducing labor however, that may be a longer term story.
Great post! I agree that digitizing aspects of the customer experience serves to ultimately strengthen the relationship between consumers and Shake Shack. However, to answer your questions, I do not think that the lack of lines will be a hindrance to the “hype and buzz” of the store. One example that I can think of is the Apple Store, which has seen a decrease in lines in recent years due to similar factors like consumers purchasing online. Has the lack of lines outside the store hurt Apple sales? Experts say no. Even though the lines have diminished, the stores are doing well and Apple is currently the number 1 retailer in terms of sales per square foot . This leads me to believe that the freed up space in a Shake Shack could actually be a good thing, as it would (1) be able to grow its revenues by not having to turn customers away due to long lines and (2) be able to utilize the free space to enhance the customer experience as you mentioned in your question. An example of increased customer experience could be providing more tables for customers who dine-in, or increasing the size of the kitchen so the staff can deliver on orders faster and decrease customer wait time.
Great post! While I do agree that Red Lobster may decide to pass on the increased cost of seafood as a result of global warming to the end consumer, I think there are other ways that Red Lobster is exploring mitigating cost before making drastic price changes that would be very noticeable to the consumer. In addition to lowering cost through vertical integration of the supply chain (farming lobsters in Malaysia via aquafarm), Red Lobster is also subtly changing their menu product offerings by substituting the species of lobsters available to diners. This substitution allows Red Lobster to avoid higher procurement cost while still delivering on the customer promise of taste. Furthermore, few consumers can tell the difference. For example, the restaurant increased its offering of Rock Lobsters – these are the types of lobsters it is farming in Malaysia, a species that is cheaper to produce. Only this species does not have claw meat, only marketable tail meat. Thus, Red Lobster added the “lobster tail” offering, which uses a different species completely but the difference is barely noticeable.
Additionally, another way that I see the restaurant being sustainable in the long run is to increase not only the different types of seafood offered, but also to increase the total number of non-seafood offerings – a quick peruse of their menu shows that Chicken Wings and Mozzarella Sticks are just as much as the menu as other seafood-related items. Thus, perhaps the restaurant is pulling levers through food substitutions to deliver on the whole experience of “food away from home” or dining out, rather than simply passing the cost of seafood to the end consumer.