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On December 1, 2017, niv commented on Nissan at the Brexit Poker Table :

Great read. While I take your point that the UK will have to renegotiate positions with all trade partners including the non-EU ones, I’m leaning towards a more positive view on that. The EU has an incentive to make an example out of the UK by giving them harsh terms, so as to deter other European countries with populist uprisings from gaining traction. The rest of the world has no such agenda. Beyond the administrative hassle involved in drafting up the contract, I would think the U.K.’s position with the rest of the world could actually be strengthened. In fact, if the negotiations with the EU begin to turn sour, the carrot of relocating production to strategic ‘rest of the world’ countries might actually prove useful in negotiations. Nevertheless, it is critical that Nissan thinks of contingencies in the short term as it may take a few years for the new equilibrium to be reached.

On December 1, 2017, niv commented on Jaguar Land Rover: A Bumpy Ride post-Brexit :

Very well written.

While 40% of the imports might be sourced from the EU, I wonder if the currency advantage will be a key driver in JLR staying in the UK. If 54% of their sales is to the rest of the world, they were just handed a 10% bump in profits in June 2016 thanks to Brexit. It is an interesting trade-off that I suspect banks are grappling with as well – staying headquartered in the UK undeniably gives them a cost advantage in the short to medium term (as long as the uncertainties around the negotiations cast a pall on the GBP) but in the long-term supply chain disruptions will force adjustments. Interesting time to be a CEO of a UK company.

Ultimately, re-shoring alone doesn’t need to be the answer – they could do something similar to unilever (which is to match their manufacturing and sales locations as closely as possible). In other words, this would mean a shift to a distributed model of production rather than a centralized one. Necessity is the mother of all innovation and we might be in for a pleasant surprise.

Nice work!

The essay appears to imply that the production bottleneck is appearing because of their practice of producing only after the customer order is placed. I’m not sure I agree there – I actually think this visibility of customer demand will actually help them plan their production process much better and should actually decrease the bottleneck.

I wonder if Tesla’s issues of lacking scale is actually exacerbated by rather than alleviated by vertical integration. While Tesla might have the edge in building a superior autonomous vehicle, it is clear that the production process is yet to be re-engineered to achieve true scale. Tesla should be spending resources in optimizing this rather than vertically integrating into the battery plant in Nevada.

The essay refers to a 13.2% pop in overall sales when the rainforest alliance aspec was announced and I find that quite refreshing. Being a long-term skeptic on the effectiveness of “values-based” advertising, it is interesting that you mention this aspect. It appears to have triggered a “network effect” of coercing some of the competitors into also upholding an environmentally responsible stance. A wonderful byproduct of Lipton taking the lead in this initiative in the market!

On driving business and sustainability while improving profit margins, I don’t think the tradeoff is that straight forward. If it were, most firms would be embracing sustainability and we wouldn’t have this issue. Ultimately, disruptive innovations in the business model might trigger something that challenges the conventional profit maximization vs. negative societal externality trade-off but until then I would say that the Taiwanese consumer’s clear support of the initiative might be the best way to self-regulate the industry into behaving responsibly

Great essay.

While I love the idea of the management setting up an international agency to share best practices and to further invest in tech and risk analysis, I wonder if the biggest challenge in this case is the lack of strategic vision on the part of the company. In both the examples you outlined (wind farm and regulation-led water supply measures), they seem to be more reactive than proactive in their approach to climate change. Perhaps setting a vision of doing business in a sustainable way a la Starbucks should be the starting point? Given their size, I’m sure they could also fund research initiatives on climate change mitigation strategies, and lobby governments to embrace responsible climate change practices. All this being said, the fundamental nature of the business makes it such that what’s right in the long-term for the world will perhaps always be in conflict with the short-term need for profit maximization at Rio Tinto.

On November 30, 2017, niv commented on Amazon’s Response to the OTT Universe :

Really interesting article, thanks for sharing your thoughts!

The fundamental question in my mind from Amazon’s perspective is a worry on two fronts.

One is that while this solves the “unified experience” pain-point that customers seem to face, the fact that you still need to pay a fee for each channel you subscribe to within the interface might make it overwhelming for customers (assuming that the $4.99 a month by sports illustrated is representative of their overall service). Unless they figure out a way to bundle their services intelligently (which is where their customization comes in) and offer one fixed price for it, I struggle to see this working.

The second worry is that this is not Amazon’s core competence. Amazon’s strength in my view is in logistics innovation and they continue to be the leaders in that space. Yes, they are great at data analytics and coming up with purchase recommendations, and they could potentially bring the “big data” learning to video as well, but it worries me that they actually don’t have the true expertise to know whether they are overpaying for the content in the first place or not (which they clearly might be doing if they are bidding 2.5x what Netflix is willing to). Sort of like rearranging the deck chairs when the ship could be sinking.