Thanks for your analysis, Oded! Given Amazon’s size and dominance, I imagine that the company should have enough political / lobbying power to ensure that the NAFTA renegotiations do benefit its core business of retail and retail distribution. If the Trump administration renegotiates NAFTA as you’ve outlined above, there would definitely be resulting advantages to Mexican consumers, since they wouldn’t have to pay the NAFTA-related duty on goods under $50 as they do today. This should encourage them to shop online more, and will boost Amazon’s sales to the emerging middle class in Mexico.
On the flipside, I do worry about Trump’s proposed 20% tariff on goods imported into the U.S. from Mexico (https://www.theatlantic.com/business/archive/2017/01/trump-tariff-mexico-border-wall/514766/), which he believes would be a key way to fund the border wall. If the tariff is put in place, then the Mexico-based warehouse makes less economic sense as a location to supplement Amazon’s existing warehouses in the U.S., since all goods sent across the border to the U.S. would be 20% more expensive. If faced with this issue, I think Amazon could position the Mexico-based warehouse as a center to serve other emerging markets in Central America and South America, which could serve as avenues for Amazon’s future growth as the U.S. market matures. Exporting the goods to such countries will help Amazon avoid the tariff on the one hand, and will help the company gain better understanding of international e-commerce.
Thanks for sharing this, Matt. Per your write-up, I think telemedicine will begin to play a bigger role in providing healthcare to rural or underserved communities. I recall reading this article (https://www.theatlantic.com/health/archive/2014/08/why-wont-doctors-move-to-rural-america/379291/) about how the dearth of applicants to medical school from rural communities ultimately led to fewer doctors serving those communities down the line, and made for worse health outcomes in such communities. Telemedicine creates an avenue for doctors who would otherwise not settle in underserved communities to provide healthcare to such areas, and could also lower costs of healthcare to patients since they do not have to travel to larger cities to receive specialized care.
My worries about telemedicine echo some of those you’ve outlined around physicians’ resistance to its adoption and relatively high upfront costs to the hospitals that adopt the technology. In addition, though, I worry that some of the empathy and bonds that doctors form with their patients may be lost when the interaction takes place over a screen and not in-person, and that this may impact the care which doctors put into their diagnoses. In addition, if patients are not able to properly explain their symptoms over video to doctors because they lack the vocabulary, and doctors can’t compensate for this lack of communication by physically interacting with the patients to get a better sense of what’s wrong, I worry about misdiagnosis occurring at a greater frequency in telemedicine interactions than in regular office visits. However, in the absence of viable alternatives, telemedicine is a worthy option for rural communities that would otherwise lack affordable healthcare options.
This was a great read, Yuwa. I think that you hit the nail on the head when you mentioned that the food shortage issue is exacerbated by lack of proper irrigation infrastructure. As the granddaughter of a small-scale farmer, I recall that my grandfather only grew maize/corn in the rainy season, until he was able to invest in irrigation projects that let him grow maize in the dry season. Maize has a short lifecycle (with less than 6 months from initial planting to maturity), and being able to grow the crop twice in one year on one plot of land (versus just once during the rainy season) increases the yield (by close to a factor of 2).
Given that irrigation projects make so much sense, the main issue is finding a way to provide Malawian farmers with the capital to build such systems. ADMARC could play a role in this, if, for example, the entity advances capital for a group of farmers to build irrigation systems, and holds back some of the cash consideration it would pay them for their harvest as repayment over a few years. This scheme could quicken the adoption of irrigation across the country, particularly if ADMARC starts with large scale farmers who are more important to the supply chain, and then expands such a scheme to small scale farmers.
This was a fun read. I like your suggestion that Sierra Nevada could look to use drought-resistant hops strains to reduce its water usage, and think the point on diversifying the hops supply chain to include hops from other countries such as Germany or South Africa is valid. However, I worry U.S.-led isolationist policies may impact Sierra Nevada’s ability to source non-U.S. hops economically, particularly if additional tariffs are placed on products or raw materials imported into the country. Current talks include tariffs on German/Chinese steel, for example, but extension of potential tariffs to agricultural produce or commodities could impact Sierra Nevada’s ability to pursue such a strategy.
To your question on inspiring others to think about climate change or sustainability, it can be hard to do so as the underdog in an established industry. However, I thought of Patagonia as a company that prioritized sustainability and a “clean” supply chain in the outerwear/camping goods space, despite being the underdog. Many customers were willing to pay a premium for Patagonia jackets because they helped them feel good (or at least, less guilty) about their purchasing decisions due to their relative sustainability, and Patagonia is now a leader in the space because of this following. Sierra Nevada could charge a premium for its sustainably-brewed beers if customers prove willing to pay for the feeling that their beer is sustainable, and could earn better margins than peers who do not prioritize sustainability. If everyone follows the margins, it’s not a stretch to see how Sierra’s position as a leading craft brewer could inspire both larger and smaller brewers to do the same.
I thought this was a fascinating read. I agree with your point that dealing with increased costs due to Brexit by simply passing them onto Guinness consumers isn’t tenable, given increased competition in the beer space from high-quality craft brews. I also imagine there would also be significant public outrage in Ireland to price hikes, given that the Guinness still the most consumed brand of beer in the country, and given the national pride attached to the brand.
With this context in mind, could Diageo focus its efforts on expanding the non-Guinness portions of its business, instead? Johnnie Walker, Smirnoff, and Bailey’s, while all major brands of alcoholic beverages, do not carry the same ties to national identity that Guinness does. I also imagine that they do not face the same type of small-scale craft-brew competition that Guinness does. Could Diageo then play around with some of the levers you’ve raised earlier (relocating factories to avoid Brexit-driven logistical issues, or raising prices to provide a cushion for Brexit-related costs) on these brands?