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This is excellent, great work. Clearly Boeing is in a very difficult position right now. I was familiar with the need for more efficient engines and lighter planes, but I was unaware of the impact of climate change on take-off weights and clear-air turbulence. Scary stuff.

Although it will be difficult, I am highly confident that Boeing will, over time, create fuel-efficient engines and lighter, carbon fiber planes. The reason is, as another comment alluded to, Boeing has proper incentives to do so, both in the form of regulation and demand from customers. I am more skeptical, however, of their commitment to biofuels. I wonder if the ethics of a lighter carbon footprint will be enough to incentivize Boeing at a time when it’s already dealing with many significant changes in the industry. Perhaps regulation to this end is the appropriate government response?

On December 1, 2017, CranberryCo. commented on Why is Trump concerned with laundry? :

Very interesting post!

I just wanted to disagree with earlier comments that indicated Whirlpool may end up worse off as a result of these isolationist policies. While I agree that retaliatory trade policies from other countries are inevitable, I believe the impact to Whirlpool will be negligible relative to the impact on its Korean competitors. The reason being that the U.S. is a large export market for Samsung but any one country is not as important for Whirlpool’s relatively small amount of exported goods. Samsung is smart to hedge its risks and start investing more in the U.S., but those plants may not be able to manufacture the same quantity or with the same cost structure as currently done abroad — there is a reason Samsung wasn’t investing as heavily in the U.S. previously. If these high border taxes are implemented, I agree with others that it’s the American consumer who will be made worse off.

Nice work, Darius. It was an especially interesting read for me given my lack of knowledge about the industry or the company in particular. This is a fascinating case to illustrate the quick effect of Brexit on domestic businesses.

I am still struggling to understand one of management’s comments — the one about further price increases over the next 2-3 years. If I’m understanding correctly, the effect of Brexit was to increase the cost of raw materials imported from other parts of Europe, but isn’t this a one-time increase? And hasn’t management already compensated for this increase if they’ve achieved record profitability? I understand the impetus to pass these cost through to consumers but it doesn’t seem like further increases in future years are warranted.

On December 1, 2017, CranberryCo. commented on Super Mario, Zelda, and a Broken Supply Chain :

Hey Mark, great article!

I had heard about these supply shortages from Nintendo in the past and always wondered how a company of its stature could let it happen. As you mentioned, it creates an incredibly frustrating customer experience. I am surprised to read about what sounds like an over-reliance on historical product launches to inform demand predictions. I fully support your suggestion toward more predictive analytics, but think they should be able to do it, at least in a simplified form, in less than the 2+ years you mentioned. Highly analytical demand prediction was something I encountered in my prior work experience, and in today’s world there is so much information available to predict consumer demand. You mentioned social media, which is a great place to start, and I have a few other suggestions: 1) search traffic (even just google trends as a starting point) 2) page hits related to Nintendo products on popular video game websites 3) traffic to the product’s wikipedia page. These type of metrics should be better demand predictors than past product launches.

On December 1, 2017, CranberryCo. commented on Ford Motor Company Faces Steel & Aluminum Supply Price Headwinds :

Thanks, DM. Very interesting stuff. I wanted to address one of the questions at the end of your post, specifically around whether this is a temporary blip. My understanding of the situtation in China, at least as it pertains to aluminum production, is that the regions affected will likely be subject to the same anti-pollution regulations in the foreseeable future. The top 3 aluminum producing regions account for 70% of the total output, and those are among the most smog-plagued regions. The country is in the midst of observing the significant health risks that occur from the pollution spike, particularly in the winter, and to backtrack on these pollution-curbing policies would indicate a surely unpopular view on the low value of human life. All this is to say that the pressure for Ford to figure out a path to cost-effective carbon fiber as soon as possible is extremely high.

On December 1, 2017, CranberryCo. commented on Starbucks: the rise of mobile orders :

Great stuff, Sahael. Your post and some of the comments above touch on the way that mobile ordering removes some of the traditional coffee house experience and potentially alienates some of the coffee connoisseur customers. I agree with this but rather than seeing it as problematic, I think it’s something Starbucks should lean into. I believe the value proposition of a Starbucks is different in certain cities, such as New York, than in other cities, and that the operational choices should reflect this. No one I know goes to Starbucks in New York for a true coffee house experience (there are ample substitutes for that elsewhere in the city); rather, its value prop there is about convenience, and caters to busy workers. I would do everything I can to encourage customers to get onto the mobile app in order to minimize wait times and improve their experience, and would minimize the typical barista chat, so we can get more customers through the door. However, in other cities where customers still come to Starbucks for a traditional cofee house experience and wait times are not as high, I wouldn’t offer mobile at all.