Jenny F

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I found this essay particularly interesting because I see many parallels with the music industry – with the rise of streaming and new consumption behaviors (i.e., shifting from a la carte like buying a song or attending a movie theatre to all-you-can-eat model of streaming). However, I think a few factors make music fundamentally more challenging than video. Specifically, windowing is shorter and less common in the music space than movies and often only doable by major stars with enough clout (e.g., Taylor Swift, Adele). Therefore, I think the movie industry is more well-positioned to capture revenues during the windowing periods, which makes the PVOD strategy potentially very compelling.

Consumers have also been trained to expect to find all music on a single platform (i.e., pick Spotify, Apple Music, or Pandora) whereas consumers do not expect all video content to exist on a single platform. I believe this is why it is more challenging for players such as Spotify or Pandora to consider vertically integrating and investing in original content compared to video streaming services such as Netflix. This is perhaps why companies like Warner Studios appear to be reacting to the industry changes more quickly than their music record label counterparts. While I agree that there can be subscriber fatigue with OTT services, the number of services that reaches “fatigue” is something to still be tested. Fortunately for movies and television, the concept of exclusive content across “channels” such as “different OTT services” is something that consumers accept, unlike in music, and has, in many ways, already exist in incumbent cable subscription models.

To continue the conversation with regards to the 2 questions you posed, I agree with our classmates that Warner should have a vested interest in sustaining the movie theatre-going experience. I think this is one of the reasons consumers are seeing higher adoption for 3D movies and action-heavy films that demonstrate the value proposition of a theatre, which enable a drastically different video watching experience than at home. I think managing theatre stakeholders while trying to capture value in between the theatre window and home/DVD through PVOD is very clever. One thing I’d be more curious to understand is how successful have partnerships with telecom players been in the past. For example, does the T-Mobile and Netflix bundle benefit T-Mobile more or Netflix more?

Interesting share Danny – I learned a lot. Your comment around how much the US is paying for each manufacturing job is particularly jarring ($250K to $1M per $54K per year manufacturing job). In addition to investing in local education as Nick and Austin mentioned, I think Foxconn should also consider how long the U.S. government will continue to incent manufacturing companies to set up plants in the U.S. For example, as more companies similar to Foxconn building manufacturing in the U.S., could there be positive spillovers effects? For example, more companies could be investing in training talent or improving education, helping combat the workforce skill gap. In addition, I read that Foxconn historically has treated its workforce poorly and/or tried to replace human workers with robots when possible [1], so I think that further validates why the Wisconsin contract includes time-based targets for job creation. This and the clawback feature should further incent the company to invest in the education ecosystem.

1 Singer, Alan. “Foxconn Factory in Wisconsin is a Another Bad Trump Deal.” July 31, 2017. Huffington Post.

On December 1, 2017, Jenny F commented on Dark days ahead — SolarCity vs Protectionism :

Thanks for sharing John. I think you and the comments above posed some interesting options for SolarCity pending the tax tariffs such as looking for alternative suppliers, building Gigafactory 2, or creating a backlog of orders as Phil mentioned. Beyond rising costs, I think the strength of existing competitors to SolarCity in the US market will also influence how much SolarCity will be able to survive until Gigafactory 2 is operational. As Tim mentioned, Suniva, a company that filed for bankruptcy, prompted the tariff conversation. What’s unclear to me is how well-positioned companies like Suniva are to retake the US solar market. For example, do they have enough capacity in their US-based manufacturing to meet demands at reasonable prices? Or alternatively, will consumer demand change because the price of rooftop solar systems rise, which would influence the company’s economics and longevity? According to an article I recently read, this proposal could “double the price of solar, destroy two-thirds of demand…and unnecessarily force 88,000 Americans to lose their jobs in 2018” [1]. Given this view, this policy seems to be a very expensive way to prop up a few, less efficient American solar panel manufacturers at the cost of declining adoption for clean energy and a significant loss of jobs. I agree and echo Tim in his point of view that the ultimate goal of increasing sustainable energy should be nationalistically agnostic.

1 Korosec, Kirsten. “Why Rooftop Solar Might Get A Lot More Expensive in the US.” September 22, 2017. Fortune.

On December 1, 2017, Jenny F commented on Nespresso: Protecting the World’s Best Coffee :

Thanks for sharing Brooke! As an avid coffee drinker, I found to be a very interesting read. It is encouraging that one of my favorite products, Nespresso, is investing in sustainability initiatives. Though, it is also concerning to hear that only 1-2% of coffee grown meets their quality requirements!

Continuing the conversation you kicked off, I think Nespresso can afford to raise prices on consumers for their coffee pods in order to support their sustainability sourcing practices. Nespresso has built a business model with high fixed investment (the machine) and relatively low variable costs for consumers (pods ranging $0.5-0.75). Given this high fixed investment, I believe consumers are likely to be less price-sensitive on the pods, hoping to “get the most of their machine.” Especially for first-time home buyers or new residents, if Nespresso is the only coffee machine in the apartment or house, consumers have fewer cheap substitutes for homemade coffee.

That being said, I agree with you that Nespresso can do more. I think Nespresso could explore expanding the AAA sustainability program beyond training and education to including financing. Starbucks has a Global Farmer Fund that provides financing access to farmers to invest in infrastructure and new technologies [1]. Additionally, Nespresso could explore diversifying its product line to include other beverages such as tea or hot chocolate pods to lessen its dependence on a single resource.

1 “Starbucks more than doubles Global Farmer Loam Commitment to $50M.” Press Release, Jun 22, 2015.

On December 1, 2017, Jenny F commented on How climate change put Ferrero in a unique position :

Thank you for sharing! I agree with both Alex and Paula that Ferrero should be driving the sustainability debate. As I read your article, I recognized many parallels with the IKEA case we studied in class. In fact, Ferrero seems to have adopted many of the options IKEA faced in the case – from vertically integrating with hazelnuts and working with suppliers to meet stricter standards. Just as Alex prompted, I am slightly skeptical on how much influence Ferrero will have on the palm oil debate given its consumption is only 0.3% of world’s production. Yet, IKEA only accounted for ~1% of all industrial wood sourced on the planet and has been able to influence the supply chain.

With regards to hazelnut, I agree that Ferrero should be strongly incentivized to invest in long-term sustainability goals and well-positioned to do so, but I wonder if being vertically integrated has conflicting short-term goals. Given they have matched exactly their procurement needs, will they be blinded in the short-term against investing in potentially more expensive, sustainable practices?

Thanks for sharing! I think your article did a great job highlighting how Walmart is disadvantaged compared to Amazon with regards to consumer shopping data, which impacts their ability to predict and manage inventory. Partnering with Google, as you discussed, will hopefully provide Walmart with a wealth of consumer information that can better inform their inventory management strategy. In addition to understanding WHAT inventory to stock, I’ve read that Walmart is also addressing HOW to stock its inventory more efficiently and cost-effectively by testing Symbotic warehouse automation systems [1]. It’s clear Walmart is making moves to address areas of weakness in its supply chain.

To continue with the discussion from the questions you posed, I do think an internal innovation arm can enable great entrepreneurial ideas if it is organized and incentivized properly. As mentioned, Walmart has built an extensive footprint of stores and distribution centers, massive scale in their business, and several e-commerce acquisitions. These are all unique properties of their business that an internal team will be more familiar and can leverage towards future innovation, whereas external ideas or acquisitions may not always fit seamlessly within the existing Walmart model.

I think using store associates to deliver packages is certainly an interesting one. As you mentioned, I’m skeptical if this will be a strong long-term play as delivery may be replaced with robots, drones, or driverless cars in the future. However, I do think it could be an important short-term play to build Walmart’s e-commerce and delivery business. By making deliveries quicker and more accessible to customers, Walmart could shift consumer mindset from considering Walmart as a brick-and-mortar store to an e-commerce partner. Imagine a world where a consumer checks both and for goods to be delivered, knowing both will deliver within 1-2 days. For some goods, due to Walmart’s low prices and closer distance to the end consumer, Walmart could very well be better positioned to deliver a consumer’s need than Amazon.

1 Boyer, Matthew and Spencer Soper. “Wal-Mart, Google Partner on Voice-Based Shopping to Catch Amazon.” Bloomberg, August 23, 2017.