Thanks Andres 😉 Really enjoyed reading this article. (big infra/commodities fan!)
First I’d like to address Astatine’s comment. While I do agree that digitalization is necessary for CemArgos to operate successfully in the space, I would think that the effect is more medium-term than short-term. Being first to market will enable CemArgos to provide a value proposition that no other player can offer and also allows CemArgos to effectively control its own destiny by being able to respond to changes in the market (since they’ve already made the jump into digitalization). This will also enable CemArgos to cultivate relationships with its customer base, and the construction/commodities industry tends to follow a multi-year contract approach with greater loyalty among customer and supplier. Since these products are not highly specialized, it is then up to CemArgos to focus on reducing its cost since price is market-fixed.
To address your question around organizational structure, I’d like to add to Clare’s excellent post. The way I see it, there are three viable options.
The first is to build a distinct vertical focused on digital transformation where all employees devoted to digitalization are housed. You can think of this as sort of a center of excellence/call center/innovation hub. The advantages of this option is it would enable the team to extract synergies; however, they are less accountable for day to day operations and could perhaps cause friction among the various departments in case something does go wrong.
My preference: The second option is to build one lean centralized team in addition to housing specific employees under the different verticals. This option would increase accountability across the board, but synergies are likely reduced and you could face communication challenges that will make the digitalization team less adaptive/responsive to changes in the market once competitors begin their own digitalization venture.
The third option is for the risk-averse. It would entail building a small lean team but outsourcing most of the work to a facility manager who would operate the day to day. This might make sense if the player was small scale, but I would assume CemArgos should be able to fund/develop a capable team internally.
I completely agree about the need to sort of streamline Planned Parenthood as it seems to be all over the place at the moment, but it has done a fantastic job so far in building a brand name that resonates with its consumers. I am not too worried about the privacy aspect and would like to echo Isabel’s point. If anything, I think that the digital space allows for more privacy, but might take away the human element (comfort, counseling etc.) that we tend to get from one-on-one visits. An issue I’d worry about is perhaps the vulnerability of the digital world (hacking etc.) as that could be a major problem down the line if any ‘attacks’ take place.
I also think Planned Parenthood should expand its reach, despite the current political and cultural climate. I feel that momentum played a key part in changing the game here, and any slowdown in momentum may enable adversaries to destroy all the value that Planned Parenthood has brought to the table.
I see plenty of advantages that far outweigh the disadvantages of entering the telehealth space. We’re seeing far greater accessibility, speed of access, anonymity/privacy (somewhat), as well as reduced costs in the long run (and perhaps even in the short-to-medium term).
Great topic! Also want to send a shoutout to Bumper the Cat for bringing up very valid points and suggestions for scalability.
In response to your questions:
QUESTION 1- Viability: is the vertical farming model a viable business? Can their production become efficient enough to offset the high costs of urban real estate and high-tech hydroponic assets?
QUESTION 2- Share: can the vertical farming model truly compete with other forms of agriculture that benefit from economies of scale?
I don’t see why not. If anything, I believe a key advantage of vertical farming lies in its space utilization (they claim to produce more than 100x for a specific plot of land).
Although there’s been a wave of bankruptcies in the vertical farming industry lately, I think there is potential for growth if a company such as Plenty focuses on producing high-value product at lower operational cost than normal. A big issue I see is the fact that their product is unlikely to command a premium over regular or organic produce, so honing in and exploring what makes sense to produce on a large scale should be key priority (lucky for Plenty, they have ‘plenty’ of money aka $200M+)
I also wanted to note that a big cost element for vertical farming comes in the form of energy cost (for lighting). As time passes, this impact will be reduced. As of now, I believe there is potential for vertical farms to perhaps ask for government assistance and/or collaborate with outside stakeholders to reduce this cost.
I wonder whether the industry is seeing this ‘healthy’ form of competition in the wrong light. As I wrote in my essay about ‘artificial’ meat, I see massive synergies/knowledge exchange happening if vertical farms start involving large corporations in their journey.
Great work on this, and very interesting questions. I will tackle each separately.
Q1 – With the US having recently withdrawn from the Paris Climate Agreement, is there a possibility that all of the work Hyundai did to mitigate its exposure to future regulation be for naught should other countries follow suit in leaving the agreement?
I think yes and no. Yes in the sense that it is quite concerning the speed at which 10% of its sales base (see links below) no longer ‘required’ these advancements in sustainability. I also believe that certain US states have decided to continue adhering to the fight against climate change, despite the US withdrawal from the Paris Climate Agreement (see 3rd link below).
On the other hand and as others mentioned previously, investing in sustainability is a long-term game and Hyundai should continue on its path. I would also like to add the point that, even if US as a government has taken a step back, society is well aware of climate change and this may in fact be a great PR tool to increase/boost Hyundai sales.
Global sales: https://www.cnbc.com/2017/01/02/hyundai-kia-global-vehicle-sales-fall-2-in-2016-missing-targets.html
US sales: https://www.hyundaiusa.com/about-hyundai/news/Corporate_HYUNDAI_MOTOR_AMERICA_REPORTS_SEVENTH_CONSECUTIVE_YEAR_OF_RECORD_SALES-20170104.aspx
Q2 – How can governments incentivize and/or educate companies within their countries to mitigate the risk of their supply chains becoming prohibitively expensive should future tariffs on emissions be implemented?
I’m going to tackle the incentivize portion. Most governments offer different types of incentives to convince companies to go green/invest in tackling climate change, ranging from tax credits/deductions to improved access to loans and funding. I do think governments can play an even bigger role in shaping the future of sustainability, perhaps by setting up specific industry verticals that deal with addressing climate change/supporting companies in their effort to tackle climate change.
Great essay! I think the idea is quite similar to the Nissan article written by a fellow classmate, but I believe BMW is both better positioned to succeed and is also taking a better approach to battle isolationism. BMW is a high-end maker, and as such will not be impacted by disruptions to its supply chain (unless they’re huge, but I don’t see evidence that that could be the case in the short term).
I don’t think BMW should be overly concerned with Trump’s attacks and use it as a basis to decide on whether to build the plant in Mexico or USA. I’m quite surprised by their response; however. I found Ghosn’s diplomacy/lobbying in UK to be a key factor in ensuring Nissan gets the best deal possible, whereas I don’t think BMW is doing a great job shielding itself from the increasingly isolationist US government.
To answer your question at the end, I agree with Minecraft’s comments about spending money on a PR campaign (however unfortunate). BMW could also increase its CSR spend/engagement in the community, as that proved to be a key driver of acceptance for a previous client of mine who had purchased an ore in Ghana without requiring massive PR investments.
ignore last two lines** 🙂
Very well written article, with key concerns explicitly highlighted. To answer your question, I’m not sure I would call Brexit a ‘bluff’ and actually think there is not much Nissan can do but work with what they have at the moment. I’m wondering whether Ghosn is keeping his cards close to his chest as Nissan figures out what to do next.
I would be very worried if I were Ghosn. Nissan operates in the ‘economy’ tier of the market, and any disruption to its supply chain that may increase costs or reduce output could have damaging effects on the bottom line.
I fully support your proposed set of solutions, both short term and long term. I found it very interesting that Nissan was able to produce vehicles from its Renault plant in France. I agree with Juan’s point on teaming up with other car manufacturers (non-Renault), unless I understood his point incorrectly.
support your arguments for finding alternative production facilities, and R&D in production line versatility is always a sound course of action (although not specific to the Brexit concerns).