Melissa, thank you so much for the insights! I agree with your recommendation on lobbying in order to avoid unfavorable tariffs would be the most important actions that Diageo should take to combat the issue. Given its significance and contribution to UK (# of employees, pride as a British company, technologies, tax income etc), I would be fairly optimistic about government’s effort to avoid the tariffs. In the end, what the government would need to avoid is companies like Diageo moving its HQ to other locations where it could enjoy its free trade benefits. As Pratik correctly pointed out, Diageo could be the only one alcohol producer who will be impacted, so I would recommend Diageo to team up with other industries where such unfavorable tariff could be implemented as the result of Brexit (Pharmaceutical, finance, etc) to lobby together, in order to increase the influence to the new regulations.
Though I think Brexit will have a significant impact on Diageo’s profitability I think we are still a while away from establishing clear regulations on what the new tax regime might be. Additionally, there will be a significant lead time between formulation and implementation – particularly for such a complex process. I believe Diageo will be seriously reconsidering relocating its headquarters out from the UK and into the EU (Paris? Dublin?) to continue to enjoy its free trade benefits.
Thanks Hak for an interesting read! I am a coffee lover but also a Sriracha lover as well.
I agree with all of the options you have mentioned, and in addition to that, (despite the strong disagreement from Kamau) I would still consider the possibility of exploring different recipe of the sauce. What we all want to avoid is having zero Sriracha during global outbreak of jalapeno epidemic, and I believe it can be avoided by start sourcing and using different types of hot pepper (slowly), while doing best to keep the taste consistent. We might even discover more tastier recipe with different mix of hot peppers too! Just like the taste of Coca-Cola evolved since 1887, I’m sure Sriracha’s flavor can be further improved. I would say, it is narrow-minded to simply state changing the taste or the recipe is compromising the quality.
Great article Karen! I agree with above comments that it is relieving (and surprising) to see a company taking actions to actively tackling the climate issues. I have known the brand Patagonia for a long time; however, I have never realized that such aspect of the company, so I became curious about how they communicate on their position towards the climate changes and its action. I just visited Patagonia’s homepage, and the first thing that came into my eyes was not about their sales, or about quality of their products – it was an ad for awareness raising campaigns “This land is your land?”, discussing how our land and water are under threat. I became fully convinced that they are truly hoping to combat the climate changes.
With regards to your concern on the tension between good growth and bad growth, I would argue that it is already under bad growth, given most consumers are not aware of their corporate vision. I would suggest Patagonia to keep on advertising their mission, and make sure all purchasers or potential purchaser are well aware of its environmental and social mission. I disagree with Philip’s concern that consumers may not be willing to pay premium, as the consumers who are able to afford Patagonia are likely to resonate with its mission and would be happy to pay for the premium.
Thanks for the post Sahael! I strongly agree with the posts above, but I also think the fact that Starbucks is providing the option of mobile orders is pushing the commoditization of their products. As we discussed in the class, not everyone is purely the coffee connoisseurs or the java joes – some people do switch between them due to circumstances, and the option of mobile order will become a huge factor and an incentive for people to shift towards java joes. So, I would be extremely cautious to implementing the mobile orders too quickly, not just in terms of the number of stores, but also in terms of the drink options. Limiting the type of drinks to the simple, standard ones (regular coffee) and excluding ones such as Frappuccino and smoothies may be a good mid-ground solution (at least for now) that would prevent commoditization but at the same time address to the needs of busy working people with the mobile orders.
Thanks for the post, Ketty!
I am not as worried about the cost in the long run, given 1) people are willing to pay extra for any personal customization, and 2) many of the changes you have raised would be capital intensive, but the labor costs will be reduced, so it shouldn’t be too much of a cost increase as a whole.
While I love the idea of the Aramis technology and the individual customization it provides, I do not think it is for everyone. Even in the future where customization is cheap and accessible, there will still be “trendy items” in the market because people will still like to own what his or her friends (or celebrities) own. We will surely see the gradual shift towards customization in the future, but I wonder if Adidas can precisely address such shift, and ensures its products, supply chains (including Asian Factories and SpeedFactory in Germany) and labors are ready to produce the output to match the shifting demand in the market. I believe failure for Adidas to adapt to the changing market will significantly reduce its market share (and lose the competition against Nike)..
Chris, thank you for the post. I may be looking at this from a completely different angle, but in my opinion, isolationism is often originated from the label that the general public places on each company, and in Apple’s case, the fact that Trump (and probably most people in the world) considers Apple to be a U.S. company is one of the root causes of the issues mentioned above.
Given the ongoing globalization in every aspect of business, I wonder the concept of placing such label to companies would still make sense. As you and Mohamad mentioned, most of the components are produced in Asia, and later sold in Asia. As for now, Apple is still mostly owned by U.S. person and funds, but with the economic development of rest of the world, it is possible to have the majority owned by non-U.S. shareholders in the future. In that case, we would only call Apple an U.S. company based on where its founded, and where the current HQ is…would these reasoning remain to be logical for Trump to declare such statement, or for Apple to “return” to U.S.?
I believe globalization is an irresistible trend, and Apple will further de-Americanized in the future; it makes me wonder, if concept of isolationism will completely disappear and general public would think it is the common property of the world, or there will be stronger resistance from the isolationists.