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This is a really comprehensive piece! You’ve addressed the broad-reaching ramifications of a protectionist policy.
I think ultimately a holistic cost-benefit analysis has to be done. Who would benefit from the enactment of the policy? Who would lose out? It seems like the airlines’ pockets are the biggest gainers if we are to suppress competition – whether the competition was fair or not. However, consumers get slapped with higher prices all around – for their cost of air travel, delivering packages overseas, the sudden reduction in air travel options restricting their plans. Related industries that rely on air freight, like transportation companies (as you’ve pointed out), importers, manufacturers who procure foreign raw material, also face higher costs.
What should be done depends on whether you want to please the airlines because of some political agenda, or whether you’re concerned about the welfare of society and related domestic industries.

On December 1, 2017, Isabelle commented on A Green Merchant of Death? :

This was a thought-provoking article – I wouldn’t have suspected PMI would have had such best-in-class practices. The negative halo effect on the industry tends to cloak everything it does in a negative light.

I would still argue that the consumer use of its tobacco products is part of PMI’s value chain, and therefore, how PMI designs and broadly influences how consumers use their products could lie under its care. Smoking generates a host of negative externalities – social and air pollution. While I don’t know how much smoking contributes to air pollution, this is definitely something to think about. If we could quantify that and add that to PMI’s carbon emissions number, perhaps we might have to question if the PMI value chain from supplier to consumer really is all that admirable.

On December 1, 2017, Isabelle commented on Uniqlo: Uniquely Capable of Beating Zara? :

Great read!
We definitely want to start first with Uniqlo’s competitive advantage. It has cemented itself as a leading player in quality fabrics and basics (think HeatTech and AIRism). I think their year-long fabric development cycle is central to delivering on this promise.
Uniqlo is not a fast-fashion company. As far as new designs go, their T-shirts or capsule collections done in collaboration with big brands are the only ones that strike me every time I enter a store (and they don’t change all that often). However, it can still tap into fast-fashion as a basics brand by providing layering options with the latest trends, ensuring it always stays relevant even though fashion fads come and go. This will be tricky as they can only use their own designs in their branded images. Instead, they should leverage on social media influencers who can combine Uniqlo’s basics with more fashion-forward brands in their OOTD outfits.

I love the idea of a ‘subscription service’ thru eCommerce. I use my basics to death and have to replace them every few months. Because of the quality and comfortable fit I find with Uniqlo products, this is definitely something I would use. It would just be like buying a new toothbrush or deodorant that I use every day. We have to be careful though, of how we execute the subscription service. As you mentioned, the nature of basics as a commodity is a threat – and we don’t want to depress prices.

Very comprehensive and informative article!
As you rightly pointed out, leveraging brand equity to weather the brand through stockouts and price hikes is not a long-term solution. It could work well for short-term issues, but ultimately – out of sight, out of mind – if consumers cannot find the product in store, they’ll just buy something else.

I’m a fan of both diversification (in terms of sourcing locations) and upstream consolidation. I’m wondering about the feasibility of growing coconuts in other parts of the world that have the same climate characteristics as Thailand, Indonesia and Philippines, e.g. regions in LATAM in the same latitude around the equator. This could greatly help Pepsico gain more control over its supply (if its helping in the development of these plantations and copackers), decrease the physical distance between suppliers and its distribution hubs in the US, and diversifies its sourcing locations even more so it is less susceptible to natural disasters.

On December 1, 2017, Isabelle commented on Augmented Reality – a Game Changer in DHL’s Logistics? :

I love the idea of leveraging AR to increase the productivity of people – it’s not something I’ve thought about prior to this. However, I struggle to see how this could be more cost-efficient vs. just using robots to do the picking in the long run (like what Alibaba is doing right now). As you rightly pointed out in the case, combining AR+humans is still subject to some element of human error and could result in injury (and hence higher costs due to insurance or mistakes). I feel that AR+humans would be better used in a situation that is more liable to subjectivity and human error, but where machines will never be as effective – perhaps in the packaging process for fragile items or where the aesthetics of the packaging would matter more.

On December 1, 2017, Isabelle commented on Berry Risky Business, Driscoll’s… :

A very well-written and concise article.
I’m a fan of using the Agrobot if we face a shock labor shortage. Even though it’s not 100% efficient (missing 1 in 3 berries), we might just need another worker or two to do a sweep of the remaining berries after. In the long run, I still see the Agrobot as a possible cost-saver by replacing a number of workers. This might even be cheaper than raising the berries to waist level (not sure how raising the berries might affect drainage, quality etc.)

On the other hand, I’m not so sure about re-engineering the berries to have them grow in winter. For sure, this will ease the pressure on supply especially during the holiday season, but will the re-engineered berries cause a consumer outcry? Consumers may not like the idea of a genetically modified berry especially when Driscoll’s prides itself on the finest quality berries. Furthermore, the engineering, testing and approval process might take years before they can reap the fruits of their labor.