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Great essay about digitization applications at Barilla! In my view, suppliers will ultimately also benefit from an increased integration of the supply chain, resulting in a more streamlined production process, less variability and lower inventory costs. Following an initial “transition” phase during which suppliers need to be educated about how the application of a digitized supply chain at Barilla would create mutual performance benefits, I would expect only little resistance to provide increased process & data visibility.

Even though the comprehensive transition to a digitized value chain will require significant investments in the beginning, Barilla will benefit from material cost savings in the long run, ranging from the decrease of food waste and increased production efficiencies to the envisaged automation of shipping and delivery processes. As competitors are starting to enhance their supply chains, the “real cost” of not embracing the further digitization of the value chain is ultimately the loss of competitive edge vis-à-vis other, innovative pasta producers.

On December 1, 2017, MFXR commented on Apple combats with Protectionism in India :

Given an estimated smartphone market size of c.300m devices in 2017E (, a 1% market share increase in India translates into incremental revenues of c.$1.8bn for Apple (assuming that the average iPhone is priced at ~$600), indicating massive growth potential in a continuously expanding market. Once Apple does not have to bear with the stringent FDI regulations anymore (following commitment to set-up initial manufacturing facilities in India), the company will be able to operate at more profitable terms. In case underlying trade dynamics improve to a level at which Apple’s competitiveness & profitability benefits overcompensate the costs of ramping additional manufacturing capacity in India, Apple should certainly consider deploying additional capital in India.

Generally, I would argue that it makes sense for emerging countries such as India to apply a strategic/selective approach to trade regulations in order to “protect” core industries that drive the country’s economy (e.g. the smartphone industry in India). On the contrary, the country should welcome foreign capital inflows into sectors that are currently still underdeveloped (e.g. agriculture, infrastructure), in order to accelerate growth & innovation.

On December 1, 2017, MFXR commented on H&M Aims to be Climate Positive by 2040 :

I personally believe that for a global fashion brand such as H&M that operates on a level of scale at which minor cost differences have a meaningful impact on business performance (e.g. through increasing energy costs or surging crop prices), it is inevitable to make resource sustainability a key strategic pillar in the long-term. As other competitors will likely be facing similar pressure, I would expect them to move in a similar direction in the near- to mid-term, in the interest of maintaining competitive edge.

I don’t necessarily agree with some of the comments claiming that the transition to eco-friendly production in this case is customer-induced. I would argue that H&M’s customers primarily care about price and latest fashion trends. Moreover, there’s a fair chance that fashion shoppers simply don’t associate the production of clothes with adverse climate effects, as respective issue is perceived to stem from e.g. industrial manufacturing, traffic, cars etc. Relating H&M clothes to climate change seems to be too abstract and therefore would require significant educational efforts among H&M’s consumer base, with ultimately limited impact on shopping behavior (given the price sensitivity).

On December 1, 2017, MFXR commented on Ahoy! Maersk Embraces the Internet of Things :

Based on the evidence presented in the essay, Maersk is certainly on good path to be among the early beneficiaries of industrial IoT solutions in the shipping industry. Regarding your question on possible applications for control functions, I would argue that effective monitoring is among the key factors that enable control. Maersk is already equipped to collect a vast array of data along its value chain, e.g. through sensors on ships collecting data about route and speed or through tracking sensors providing insights around loading and unloading efficiency. Besides, predictive maintenance sensors will likely add another layer of data in the foreseeable future.

In order to make effective use of all data collected, Maersk should shift focus on big data analysis in order connect the individual datasets and derive meaningful interpretations that ultimately result in higher control. In case Maersk is able to connect its predictive maintenance application to its operational backbone, the integrated approach is set to increase autonomy of the maintenance process.

Given the significant impact of Boeing on the U.S. economy, any strategic consideration related to trade policy requires careful evaluation on behalf of Management. In the bigger scheme of things, and in first instance, Boeing has an obligation towards its shareholders and employees, making business performance a primary objective. In that context, the U.S. government seems to be a strong partner, as its annual subsidies and contribution to plane orders (e.g. through the Defense Department) directly affects Boeing’s competitive edge.

I would therefore strongly advise to align any trade policy considerations with the US government. Any independent moves, are set to negatively affect Boeing stand-alone as competitors are likely to continue benefiting from their government support. In case Boeing intends to encourage free trade and “lead by example”, it should therefore engage in a broader dialogue with other globally-operating aircraft manufacturers to advocate a general mindset shift across the industry. Any measures will then (ideally) affect all players on an equal basis.

VW seems to be on a good path of restoring its credibility and underlying business performance. The company’s latest financial results showed a strong recovery across all regions (9M‘17 revenues up 6.8% vs. prior year, 9M’17 operating profit up 23% vs. prior year), primarily driven by an increased number of delivered vehicles, indicating the company’s ability to regain trust among its customer base on a global basis.

However, in order to lead the electrification of the German automotive industry (and the industry as a whole), credibility will not be the limiting factor in the long run. In my view, it ultimately comes down to VW’s organizational ability to successfully capture the shift towards electric mobility, driven by continuous innovation and high strategic focus. A positive signal in that context is Management’s guidance to offer up to 80 electric models by 2025 of which 50 vehicles will be purely electric and 30 will be hybrid models. This translates into c.10 new models or model variations p.a. which seems somehow ambitious on a timeline perspective. As stated in the essay, battery development represents a core competency that drives competitive edge in the near-term. So far, German car manufacturers (incl. VW) heavily rely on Asian manufacturers. VW will need to carefully reconsider its long-term strategic approach to battery manufacturing. For example, BMW recently announced to invest EUR 200 million in a new in-house R&D center to develop prototypes of new battery cells in order to increase battery performance and reduce production costs. Finally, the corresponding infrastructure, i.e. the availability of a dense network of charging stations remains a limiting factor in most countries. In order to lead the further electrification of the sector, VW should therefore investigate partnership opportunities with leading infrastructure players (e.g. Siemens, RWE, etc.) to enable the successful implementation of its ambitious plans.