Thanks for the article, Maddy! Both your write-up and the comments above have provided some valuable perspective on the topic.
Ultimately, I do not think it is in Apple’s best interest to bring manufacturing back to the United States, as part of a long-term strategy. As you mentioned, the financial implications of such a move would be enormous. Beyond that, as one of the country’s largest and most visible corporations, Apple may be one of the few companies that can withstand pressure from the federal government (as previously seen in 2016 (1)). Accordingly, I was surprised when Apple announced its $1B fund to invest in “advanced manufacturing.”
Ultimately, I think this short-term reaction will eventually be seen as a savvy move. First and foremost, Cook lessened the governmental pressures on Apple. Additionally, I would speculate that Apple’s fund also served (at least) two ulterior motives. First, acquiescing to the governmental pressures may open the door a future tax holiday or reductions in the corporate tax rate. Second, in your NYT article, “advanced manufacturing” is described as involving high-value added in sectors like technology, automobiles, etc. Accordingly, it is possible that this fund is investing in Apple’s business (e.g., driverless cars) as they would have normally done, even without governmental interference. Only time will tell!
Very interesting post! Ultimately, I do not see great top-line potential for Adidas in the use of the Speedfactory. However, the use of extensive automation may provide them with a notable competitive advantage – a highly iterative product development process. Given the limited output of the factory in the near-term, the rapid prototyping capabilities provided by the Speedfactory might provide Adidas with the ability to conduct A/B testing with their product portfolio, thereby improving the broader company’s product portfolio and – ultimately – sales. As your second question hints at, the big question will be how Adidas can integrate these innovations into that portfolio line. I would suggest that Adidas maintains their heritage products (e.g., Stan Smiths) with minimal improvements (e.g., more comfortable soles). On the other hand, Adidas – as demonstrated in their currently fashionable products (e.g., Adidas UltraBoosts) – can introduce extensive innovation in their newer products. By doing so, I think Adidas can maintain a well-balanced product portfolio.
Thanks for posting! In response to your question, I also believe that fast fashion can be successful across different price points. As supply chains gather consumer feedback and data more quickly, supply chains will more quickly adapt to fickle consumer preferences… at least over time. Relating back to your post, will that be enough time for Gap to achieve more broad-based growth across its portfolio? Given this ongoing uncertainty, my next question would be, “when should Gap consider divesting brands and customer segments?”
On a slightly different note, I will be curious to see how – if at all – fast fashion companies like Zara evolve going forward. While they can continue to optimize their supply chains, I am interested to see how their price point evolves. If Zara’s brand becomes ubiquitous enough, will they have the ability to increase prices beyond their historical levels.
Regardless, great post!
Thanks for posting! I found your description of data localization to be fascinating from both a business and geopolitical standpoints.
As you’ve described in your piece, internet companies face increasing barriers to entry, most notably seen in data localization requirements. Microsoft’s example seems to be particularly reminiscent of the broader complications in American companies seeking to enter the Chinese market (i.e., initiating joint-ventures with local companies, in order to gain access to the market).
On the geopolitical / historical front, your piece reminded me of the work of a well-regarded Harvard historian, Charles S. Maier. In much of his work, Maier describes the role and evolution of “territories” over time. In his description, the frontier is essentially the fault line over which empires contest for supremacy. Based on your article, there appears to be a new frontier emerging as it relates to countries’ data. It will definitely be an interesting development to follow in the future.
Brief review of one of Maier’s books: http://www.columbia.edu/~saw2156/TheFinalFrontiers.pdf
Thanks for sharing the update on LEGO!
In response to some of the comments above, I do believe that LEGO’s commitment to sustainability will benefit them in the long-run. Per Nielsen, millennials are increasingly willing to pay more to purchase items that are sustainably created. As millennials increasingly become parents, this trend will likely extend to products like toys (source below). Alternatively, in the toy space, I believe there is a brand “halo effect” that influences the purchasing decisions of the purchaser (i.e., parent). While some products (e.g., Barbie) have mixed societal perceptions, LEGO’s commitment to sustainability – amongst other things – has the potential to influence purchasing decisions.
To your second question, I believe the corporate response Co2 response will be limited. LEGO is a unique company which generates ~$6B USD in revenue selling essentially one product – its famous plastic brick. Due to the massive volume of relatively standardized production, LEGO likely has a great deal of influence with its suppliers, in addition to their ability to streamline their owned supply chain. Ultimately, other companies that have similar leverage in their supply chain, due to large volumes, will have to lead the charge on CSR, in my opinion.
Thanks for sharing this piece on HPE. After reading your piece, I find myself feeling a bit cynical. While – as your Nielsen source suggests – there appears to be a general shift towards sustainability-influenced purchasing decisions on an individual level, I fear that procurement organizations at a corporate level will ultimately be focusing more on the dollars and cents associated with their server purchases. Further, it appears that, at this point, sustainability claims regarding consumable items are more capable of influencing the purchasing habits of their consumers (e.g., baby food, coffee, tea, snacks, etc.). Despite my cynicism, HPE’s strategic shift in the space is an interesting one that may pay dividends as these millennial consumers become the leaders of corporate procurement organizations.