Messi's Profile

Interesting read!

I would argue that irrespective of size of the Bombardier’s planes and whether Boeing has any products of that range or not, that the United States is justified to restrict imports from Bombardier and Boeing has a valid plea (It will be interesting to see how this is decided next year). Think about it, a local incumbent (Boeing) has made significant investments to produce bigger fleet suitable for its market, based on some cost-size considerations. Then a foreign player operating in a much different cost environment (assuming labour and energy are cheaper in Canada vs the US), add government subsidy on top of that, is selling into the local market without controls. That is fundamentally unfair not only to Boeing, but also to Americans – If this continues, Boeing’s employees will lose their jobs to save Bombardier’s Canada workers.

This is similar to the issue affecting the airline industry: government-subsidized Middle Eastern carriers crashing into open skies in other markets and causing downward pressure on fares. While competition is good, it has got to be fair!

Thank you for your balanced argument.

Similar to IKEA, Nestle has a big role to play in driving sustainable practices across its value chain. However, the key difference between Nestle’s situation and IKEA is that IKEA had a bigger leverage on the value chain and could significantly influence sustainability practices because of its scale – IKEA accounted for 1% of world wood consumption (according to case fact). I doubt if Nestle has such level of influence. I, therefore, agree with Bismah that Nestle’s silo efforts won’t cut it here, an industry effort is required if meaningful results are to be achieved. It’s commendable that Nestle is already engaging with the European Commission to standardize how sustainability is communicated to consumers. Actually, I’d say they need to think global.

One big effort Nestle has pushed aggressively as part of its sustainability effort, at least in Africa, is increasing local sourcing of inputs in its markets where its products are sold. This surely minimizes CO2 emission from transportation. Another commendable effort!

As far as corporate responsibility for sustainability goes, shareholders or the investing community at large also have a role to play. Sustainability usually requires a gradual transformation of supply chain usually costly in the short term, forcing managers to make a trade-off between keeping their “profitable” status-quo or investing in sustainability for future gains. This leaves managers in a dilemma in a world where investors and capital markets reward short-term performance. Case in point, Paul Polman (Unilever’s CEO and poster-child of sustainable business practices in the consumer goods industry), faced a lot pressure earlier this year when 3G Capital (profit-driven investor and owner of Kraft-Heinze) made a hostile take-over bid for the company. 3G Capital believed it could extract more value from the business than management currently does. Had 3G been successful, the company’s long history of sustainable practices might have been jeopardized.

https://www.ft.com/content/a2f1fe90-f792-11e6-bd4e-68d53499ed71

While I agree the protectionist measures will not suffice in driving import substitution, it is the bold stroke that is required to move in that direction. Most of these MNCs have operated in Nigeria for decades but chose to continue dumping imported stuff into the country without showing any seriousness in local sourcing. They continue to report record profits in Nigeria which they repatriate abroad, but fail to make any investments in the country. The result – high youth unemployment! To buttress the point about the need for bold strokes, the Nigerian government had an import quota arrangement with Olam International (a leading agro commodities trader) to substitute local rice for imported rice over a period of 5 years, with several incentives promised. As investigation later revealed, Olam was able to access the incentives (not paying taxes for several years), but failed to implement the import substitution program.

Nestle is a role model for many MNCs in Nigeria. Nestle sources over 70% of its raw materials in Nigeria and was the least affected MNC by the import ban. Nestle is an example of a business that is building long-term, sustainable business in Nigeria. Most other MNCs are too short-sighted and seek to recover their investments too quickly. Africa, like any developing market is a long game. MNCs need to realise that.

The ban is working so far. Since its introduction, many MNCs have started making investments in local sourcing, something they always said was not feasible. The jury is still out whether government will stick to its guns on this, but it bode well for the economy in the long run if they are able to.

Corruption in Nigeria has nothing to do with this so I would not comment on that.

Interesting article and great perspectives above!

I have just bought a return ticket for my trip after the finals. After checking prices for over 2 weeks, I settled for Emirates Airlines. Though a longer flight with two layovers, it was the cheapest and I bet, they offer the same if not better flying experience than Delta. Some of the factors below might have accounted for my choice.

The world is more connected than ever with more open sky agreements allowing many airlines to travel same routes, which means more carriers than necessary per route. No airline has a monopoly over any route, so demand and operations planning is extremely difficult. Furthermore, some airlines are being subsidized by some government (see article below on US airlines accusing Middle East airlines of receiving government subsidies) giving them unfair advantage and allowing to lowball on price. Finally, as alluded to above, beyond a minimum level of safety or quality, air travel is a commodity to the customer.
These are fundamental industry issues that I’m not sure big data can solve (for big data to be effective, you would not only need to forecast demand, you also need to be able to forecast price of your competitors which is impossible), but surely an integrated demand and operations planning system as you have suggested is a step in the right direction. Unfortunately however, all airlines have access to the same tools, so none can lay claim to any competitive edge. The major solution is that we need less airlines not more, at least on a route basis. And maybe Delta should focus on further differentiation in its service offerings

http://www.latimes.com/business/la-fi-travel-briefcase-middle-east-20170610-story.html

Pretty eye-opening; I never made the connection between fishing and CO2 emmission.

I agree with your suggestion on the need for the UN to play a bigger role in this. Even if capital expenditure is expensive for the industry presently, UN can still impose some kind of indirect limits in the short to medium term, through cap and trade for instance.

However, I think we are yet to unleash our most lethal weapon yet – the media. The media has a big role to play in campaign towards a green world. Companies like Mahura need to be called out for their apparent lack of empathy for the world we live in, despite profiting from same. This would discourage many others and get them to pay more attention to the cause. In an increasingly connected world, I haven’t seen anything more powerful in getting large corporates do the right thing.

Pretty eye-opening; I never made the connection between fish and CO2.

I agree with your suggestion on the need for the UN to play a bigger role in this. Even if capital expenditure is expensive for the industry presently, UN can still impose some kind of indirect limits in the short to medium term, through cap and trade for instance.

However, I think we are yet to unleash our most lethal weapon yet – the media. The media has a big role to play in campaign towards a green world. Companies like Mahura need to be called out for their apparent lack of empathy for the world we live in, despite profiting from same. This would discourage many others and get them to pay more attention to the cause. In an increasingly connected world, I haven’t seen anything more powerful in getting large corporates do the right thing.

Interesting!

I think profitability is also a critical consideration in this discussion, not sure you covered that. Everyone is concerned about growth these days but less about profitability. As far as I know, most online businesses are money-losing, they sell low margin products, spend so much on advertising and expect to recover those on volume which is just never enough; Amazon, the biggest online retailer is still money-losing. Macy’s, on the other hand, reported a profit of $619 million on sales of $25.6 billion 2016. If I was a shareholder, I’d rather you keep turning profit than join the e-commerce race only to start turning losses.

The e-commerce threat is real though. I would focus on offering more personalized, differentiated shopping experience to my brand loyal customers through improved customer care (Nordstrom model).

Caveat: I have assumed that those customers churning to online marketplaces are the more price-sensitive customers but that may not be totally true.

Interesting read!

I would argue though that while Blockchain looks promising, there has always been some form of application of technology to auditing. For instance, in systems audit for large commercial institutions like banks, computer-assisted audit techniques (CAATs) have been adopted to expand the sample size of transactions subjected to audit tests without any increase in human resources requirements, thus improving the reliability of audit results. Has that reduced number of CPAs? No, my auditor friends still work crazy hours. Why? The reality is that any system can be breached and Blockchain would not be an exception. “People” are the only thing can detect and correct those breaches when they do happen. So I would argue that the need for human beings to continue to verify records coming out of those systems would always remain. And more so, investors need a “scape goat” to blame when things go wrong. Deloitte’s main value proposition to the public as independent auditors can never be called into question, as least not as long as management remains separated from shareholders.