Thanks for your perspectives. Indeed, with the on going negotiations, it remains unlikely that a decision would be reached by March next year.
1. Besides the obvious which is to show how GM creates jobs in the US, GM could threaten to pass the costs on to the consumers. This would imply a drop in demand and hence, a drop in required jobs in the steel industry. Creating jobs seems to be the driver for President Trump to enforce rules around usage of steel for example. This would imply that in the long term, the implications do not work in favour of the government and might help change their perspective though unlikely.
2. Is it truly sourced from Mexico/Canada? It also seems that much of the content already comes from emerging markets and is for example – just painted in Mexico to benefit from the NAFTA agreement. In that case, it hardly needs much change in the supply chain and GM could just choose to pay the tariffs and continue to source parts from emerging markets like China.
3. Perhaps this only adds to the other incoming concerns: GM already faces incoming technologies/changes like Tesla’s electric cars, move towards ride sharing though Uber and self-driving cars being tested by Google. In the grand scheme of things, perhaps this pushes GM further in the right direction of re-thinking its ENTIRE supply chain.
Thanks for the perspectives Luke, here are my thoughts:
Firstly, looks like there are delays and trade offs to be made in the greater scheme of things: https://www.wsj.com/articles/eu-reward-to-britain-for-brexit-concessions-may-prove-meager-1511464102
With respect to your question, I don’t think GM should pass on the costs. Instead, given the global nature of the company, GM could do one or all of the following:
1. Increase investments in the UK: Given how the pound has plummeted, it could make certain local businesses attractive to buy. A giant like GM could use this opportunity to increase its influence in UK.
2. Create two isolated markets while keeping its supply chain largely the same: Rebrand the products as separate offerings for EU and UK and isolate the distributions to keep the ingredients locally sourced avoiding any import/export tariff.
3. Observe how other firms are safeguarding themselves and use it to its benefit: GM should be proactive in its approach. For example – certain firms are hiring more locals in the fear of having to let go of foreign workers. GM doesn’t have to reinvent the wheel, but could start positioning itself to be nimble for all possible outcomes. GM’s competitor Unilever owns Magnum ice-cream and their CEO has warned about increase in prices: https://www.theguardian.com/business/2016/jul/21/unilever-shoppers-rising-prices-brexit-vote-sterling
Not raising prices short term could help GM gain more market share.
4. Alternatives for product: Could it create alternatives like sorbets that could be marketed to make them more attractive and keep sales up?
If however, everyone in the industry is, it could consider passing on partial costs and not all of it to reduce the hit to its top line. I don’t think in any case it should entirely pass the costs on as it could be detrimental to the business.
5. Absorb costs in global product offerings: GM could leverage its global positioning to absorb the costs for a few years in other unrelated higher margin products it offers to the rest of the world while gradually raising the prices to encourage adoption by the customers.
Thanks Aaron for sharing your perspectives. These are my thoughts:
With the increasing trend towards local and organic, Monsanto definitely has a tough road ahead when it comes to adoption from the end customer. However, because its touch point is with the farmers, who face the pressures for generating income and hence, are more likely to adopt GMOs, Monsanto has been successful and perhaps will continue to be successful.
I agree with you that it needs to do a much better job in educating the audience on the role it has played so far. However, it almost seems like a deliberate effort not to to stay away from controversy. That being said, I would also view their work with the Gates foundation and poverty-stricken communities that you mentioned as it could be more of a forced necessity in today’s world than something done for the right reasons. Today, almost every firm has some initiative that it contributes to in society.
Also, the means to the end of world food demand could be met through other innovations rather than GMOs for example: farming that uses less space, is faster, uses less resources, etc. Source: https://www.forbes.com/sites/maggiemcgrath/2017/06/28/the-25-most-innovative-ag-tech-startups/#144be79e4883
I do not view Monsanto as the best company to lead the required change. The question remains given the political and socio-economic structure and policies, would other firms be able to find their way into the supply chain to make a difference?
Thanks for your perspectives Syndie. Things that came to my mind:
1. Shift from brick and mortar to e-commerce and key sponsorships (to maintain brand recognition). Body Shop has established its brand over the years and this shift might make sense as it reduces the need for inventory and waste due to expiry of products further. It also reduces the carbon footprint in transportation throughout the supply chain.
2. Local sourcing: Using only products available locally to create its products which also reduces the carbon footprint. For example – use the sesame oil only in products available in Nicaragua and countries nearby and use other oils elsewhere.
3. Diversify products: Much like seasonal products, create a range of products and based on the output that year, switch to either an alternative ingredient or replace with a product which is utilizes the available supply. For example – If sesame oil is not available this year, could they use locally sourced olive oil instead?
4. Use upcoming technology: From better managing existing land to reducing water usage, there are upcoming technologies that Body Shop could consider investing in.
Thank you for the perspectives on UPS. In addition to your comments, I would add:
1. Though Amazon could disrupt the existing delivery system that UPS works with, there is a privacy issue. Many would for example, refrain from importing through Amazon since Amazon could use that information and overtime, use it for its own advantage and growth.
2. Amazon on the other hand has an advantage of owning much more of the supply chain than just delivery like UPS does, offering a bundle of services to firms and could grab businesses from UPS. For example – Amazon’s online reviews being used to persuade adding additional items to brick and mortar stores in anticipation of the December holiday sales.
3. UPS gets the indirect advantage of increasing its own business as Amazon’s e-commerce grows by delivering more products to more people.
It would be interesting to see what happens and if both can co-exist depending on the purpose of the task at hand.
Thanks for the perspective. You raised interesting points.
Digitization brings in customization and I am still skeptical of its adoption for a large firm like Adidas.
1. Both Adidas and Nike (key competitor) are utilizing HP for 3D shoe printing. I wonder if this could pose a risk in the supply chain.
2. Being an early adopter of technology often comes with higher costs and often, firms that come in later gain from considerably reduced costs of supply chain due to learnings and efficiencies realized over time. This however, could risk losing market share.
3. At the same time, with customization, I see a loss of clear differentiation between product offerings between competitors such as Nike. Designs could be easily copied and like you mentioned, eventually, people might be able to produce their own shoes at home.
4. The last thing I struggle with is the customization aspect. Is it worth the effort to build a customized shoe, that is, will the customer see the perceived added value as great enough to shift from buying a standard running shoe?
It will be interesting to see what the future holds for the industry.