Jennifer Wu's Profile
Jennifer Wu
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I agree that Ford should take a long-term view when deciding whether and where to build new plants, given these are multi-decade decisions. However, it is extremely difficult for them to predict where politics and regulations will end up in the future – their guess is as good as yours or mine. Who knows if the isolationism sentiment that has been sweeping the world is here to stay? As a result, I wonder if the company can attempt to hedge their bets on plants, potentially through the following ways: (1) having a flexible factory layout and manufacturing process, such that the plant can be easily retooled at low cost to produce different types of vehicles; (2) building a plant that can be easily sold at a satisfactory price, if it proves to be unviable due to the changes in politics and regulations. These ‘hedges’ will reduce the volatility to company performance in times of changing political environments, and will reduce the cost to the company in the worst-case scenario, even though it may cost a little more right now.
There are certain means such as pricing and bundling to influence consumer behavior to reduce packages delivered, but I do not think that is a good solution to solve the emissions problem, partially because there is not too much room for reduction, as people will still need packages delivered for the foreseeable future – and this is likely only increase given the rise of e-commerce. Instead of trying to manage customer demand, I think USPS should look into the supply side. I believe using electric vehicles as the method of transport is effective in reducing emissions – in fact, just last week, environmental groups wrote a letter to the leadership team of USPS to select electric vehicles for the next generation of delivery trucks. [1] This will not only help USPS achieve its 2025 emissions target (which they are currently not on track to fulfill), but also will also catalyze the clean delivery market and accelerate the adoption of electric vehicles by other logistics companies, given USPS’ leadership in this space.
[1] “Next generation delivery vehicles selection”. Sierra Club. https://www.sierraclub.org/sites/www.sierraclub.org/files/uploads-wysiwig/USPS%20Letter.pdf
While I agree that cotton sustainability is important contributor to combating climate change, I am skeptical whether H&M, given its business model, will in practice be able to implement the stated recommendations to increase sustainability. Regarding the transparency of its supply chain, a key issue is that H&M may not even be able to trace its entire supply chain itself, since subcontracting is prevalent in the apparel industry, and particularly more so in the fast-fashion business which has large volumes, short times frames and low cost. [1] While the company can try to set standards for subcontractors, these are often difficult to enforce across different geographic reasons, and often times will result in increased cost for H&M. This leads to the main issue that holds back H&M to be sustainable in its supply chain – the fast-fashion industry is extremely competitive with thin margins and even though H&M is currently a leader, it will likely fall out of favor with its customer base pretty quickly if it reduces its fashion cycles and/or raises prices due to sustainability efforts. This is because the customers of a fast fashion brand care more about price and trendiness than about sustainability. It would require a complete overhaul of the fast fashion industry to increase environmental sustainability, and with the exception of mandatory regulations, I find it difficult to believe that any company will be willing to be the first to take a hit in revenue and margins to fulfill this promise.
[1] Starting at the source: Sustainability in supply chains. McKinsey Insights. “https://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/starting-at-the-source-sustainability-in-supply-chains”
This is an important strategic issue not just for Daimler, but also for other automotive companies developing self-driving vehicles as well, such as GM and Ford. As the author has pointed out, there are pros and cons to each option. We can perhaps get a glimpse of the potential strategy from what Daimler is doing on the consumer front. Daimler and Uber announced a partnership earlier this year where Daimler will introduce and operate their own self-driving cars on Uber’s ridesharing network.[1] With the intent of retaining ownership and operations of the cars, this suggests that Daimler does not want to be a pure manufacturer and wants a stake in the operations of its self-driving vehicles, probably because that will enable them to get more data in the field to further improve the vehicle, as Badar pointed out. Option 4 may be a viable option since logistics companies have already begun partnerships with automakers – for example, Deutsche Post DHL recently announced a partnership with auto supplier ZF to put an autonomous fleet on the ground in 2018.[2] Option 4 provides the most data for Daimler and opportunity to optimize and improve the product, and I think Daimler should try to push for this strategy.
[1] Kalanick, Travis. “Uber and Daimler Join Forces on Self-Driving Cars”. Uber Newsroom. Jan 31, 2017. https://www.uber.com/newsroom/uber-daimler-self-driving-cars/
[2] Etherington, Darrell. “Deutsche Post DHL to deploy self-driving delivery trucks by 2018”. Techcrunch. https://techcrunch.com/2017/10/10/deutsche-post-dhl-to-deploy-self-driving-delivery-trucks-by-2019/
This raises an interesting potential outcome of vendors on the GO-FOOD platform – that they may build a brand for themselves and eventually leave the platform by building out a physical storefront and/or own delivery system. Although this results in lost business for GO-FOOD, it also shows the positive externalities of a digital platform like GO-FOOD in empowering more entrepreneurs by lowering the barriers of entry to the restaurant business. However, I believe most vendors are unlikely to gain the brand recognition or demand required to build out their own delivery infrastructure, given that customers who use the GO-FOOD platform probably value choice (being able to have different cuisines every time) and convenience (only dealing with one app instead of multiple). Even if they do decide it is worth having their own delivery infrastructure, Martabak Monkey should not leave the platform entirely, as it is still a cost-efficient marketing strategy and a good way to generate demand outside of the loyal customer base.