Declining oil prices coupled with the protectionist policy can be a blessing in the long term. Low oil prices have finally forced the government to act and diversify the country’s economy beyond oil. The journey towards being a manufacturing powerhouse will not be a smooth one. Indeed, product quality will fluctuate and will affect Unilever’s output. Power issues will mean increased spend on alternative, more expensive, power sources which will feed into higher retail prices. However, if heavy capital expenditure accompanies the protectionist policy, the country can stabilize its manufacturing industries more quickly.
Obviously, this will depend on the political will of subsequent administrations to follow through with the policy began by the current administration, especially when oil prices rebound.
This solution can be effective for food products that can be produced across the globe. For food items produced on one side of the globe but enjoyed in another, environmental impact of food transportation cannot be done away with. In such cases, food subsidies become increasingly valuable. Subsidies can encourage food producers to use environmentally friendly techniques in farming which are usually more expensive.
Globally, political shocks are a big reality of doing business. Companies need to strategically prepare and develop risk management systems to absorb such shocks. In this case, M&A with a competitor without similar restrictions was viewed as an optimal option. I believe an important lesson here for companies is the need for them to accept the new reality and prepare to adapt accordingly.
Nestle’s commitment to sustainability will be tested and judged by how they scale their actions to drive sustainability across all markets in which they are active. Nestle’s revenue from Europe, Middle East and North Africa make up 30% of revenues, with the remaining revenue coming from the Americas, Asia and rest of Africa . With factories in most countries in which they market their products, and with a local sourcing strategy, it becomes essential for Nestle to expand sustainability standards beyond Europe. They may however face challenges in implementing some of the initiatives in Europe elsewhere due to deprioritization of environmental sustainability especially in many emerging markets.
Convoy and other “Uber of trucking” services have great potential to streamline and erase inefficiencies in the supply chain management. However, improvements in efficiency may come at the expense of job losses for truck drivers, a major employers for the lower to middle class. This is a delicate balance companies and regulators need to think about. But “Uber of trucking” may be another classical case of technology disrupting society as we know it, and people need to be retrained on higher skilled jobs.
For convoy specifically, it will not face as much an uphill battle as Uber’s competitors did in the ride-sharing space. This is because branding should be less relevant in back end supply chain. Functionality and quality of the service will determine success. Therefore, the Convoy team needs to double down on perfecting its service and reliability, especially as it ventures into contracting larger scale clients.