Sir Cranberry

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On December 1, 2017, Sir Cranberry commented on Hubble Contacts in an Era of Isolationism :

Really interesting perspective from an early stage company. I agree with Hogan that it is really difficult to have this topic be a priority for a fast growing, early stage company with so many other issues. I think at a higher level, input / raw material costs are a major driver of business success and so rather than drill down on isolationism at a Board level, it likely is more efficient for the Board to consider a broader set of issues that may likely impact input costs. To that point, the Company would likely be well served to diversify its supplier base or at least to look for other ways to derisk the potential for geopolitical events or idiosyncratic company events with its supplier. It is likely unrealistic for Hubble to get in the business of building its own factory and vertical integration seems inefficient given the Company’s focus and core competency. To Jonathan’s point above about supplying European and Asian markets, I wonder if the Company could take steps to better understand what it might look like to serve customers in those markets directly from its manufacturing facility in Taiwan to minimize costs related to shipping into the U.S. As opposed to thinking about just what the company can do domestically, the Board would be well served by having a global perspective and thinking hard about the scope of international opportunities.

On December 1, 2017, Sir Cranberry commented on US Isolationism Takes Flight to Ground Bombardier :

Thanks Judy, very interesting! Bombardier seems to be faced with some critical decisions. In addition to those you’ve outline, I might consider some other possible approaches/respones:

-Pursue more strategic partnerships with U.S. airlines that may have more influence over he U.S. government, which could ultimately make the issue of isolationist policy less black and white; if the U.S. government takes actions against Bombardier, they would, in theory, be taking actions against Bombardier’s partner airlines (the more of which are based in the U.S., the more difficult those actions become). That being said, it seems that political arguments do not always look beyond first order considerations (i.e., simply the direct impact on Bombardier), and so I’m not sure how much this would ultimately change the behavior of the government.

-I wonder how realistic it would be for Bombardier to enter the U.S. with a larger manufacturing footprint. I was surprised to see that Airbus has a facility in Alabama- I would be very curious to learn more about the political considerations and regulatory process for establishing that plant. Additionally, the start-up costs for such a plant would seem to be prohibitively expensive.

-Finally, I wonder whether it is at all feasible for Bombardier to consider a partnership with Boeing or another U.S. OEM. Though it seems counterintuitive to partner with a competitor, I wonder if this angle with some sort of JV structure might allow Bombardier to circumvent some of the issues facing its supply chain while also keeping an eye on the competition in the U.S.

On November 27, 2017, Sir Cranberry commented on Sorry CVS, Maybe I’ll Ask Alexa? :

Thanks for sharing this paper- it’s amazing how many different parts of the economy are being disrupted by Amazon and other delivery services in real time. As I read your paper, I couldn’t help but think that something about healthcare feels harder to disrupt with a purely digital service vs. other industries. While you mention that 80% of prescriptions do not require pharmacist interaction, CVS should focus its energy on increasing the importance of its role in the value chain for those 20% of prescriptions that do require an interaction. To the extent CVS can partner with players like Amazon for more generic drugs and seek to add value for more complex prescriptions (whether it be through mixing drugs, providing content/advice/other services around drug delivery), they should be able to carve out those areas of the supply chain that require more pharmaceutical expertise. I could foresee greater regulation / controls around drug administration given the ongoing opiod epidemic and CVS would be smart to find ways to lead the ability to digitize the supply chain for more complex prescriptions while being a champion of excellence in the administration of more complex prescriptions or drugs requiring higher levels of oversight and regulation. I worry about what the digitization of the pharmaceutical supply chain might mean for control over the dissemination of drugs to the wrong users and think CVS could play a crucial role in getting ahead of these issues and bringing them to light before it is too late.

On November 27, 2017, Sir Cranberry commented on Climate Change: An Existential Threat for AB InBev? :

Thanks for sharing this interesting paper. An additional consideration is the potential impact on the environment of the actual production process of beer. ABInbev could likely be a leading advocate for best practices in beer / beverage production in terms of mitigating its own footprint on the environment. Given our recent discussion of the Ikea case, I wonder to what extent ABInbev should further vertically integrate its supply chain to be able to better manage the production of the raw materials used as inputs in its production process. I also think that the Company could lead a marketing campaign around sustainability to encourage changes in consumer behavior or ultimately encourage better behavior across the industry, which could help spread out the costs associated with adjusting to the challenges resulting from climate change.

Thanks for sharing this story! I found it striking that only 16% of total company growth through 2022 is expected to come from the U.S. This fact on its own led me to question how significant an issue this actually is for Nike. While much of the strategy, marketing, and finance functions may be housed in the U.S., it seems that Nike could benefit by further diversifying its operations across the globe, not only to avoid the threat of isolationist policies, but also because it may allow the company to more efficiently serve the 84% of total growth coming from outside the U.S. From this perspective, I think Nike should be focused on policies that foster investments in education and support overall business, and it doesn’t seem that there should be as much of a focus on policies that are targeted towards trade and manufacturing in the U.S. I don’t believe reshoring will be entirely necessary, but I do think supporting policies that promote the development of highly skilled labor in the U.S. will ultimately be in Nike’s interest in the long run.

On November 27, 2017, Sir Cranberry commented on UTX and Carrier in the Context of Isolationism and International Trade :

Thanks for sharing this interesting update. The steps the company is taking seem to most focused on improving the cost basis and efficiency of U.S. operations (e.g., automation, reduced corporate taxes, fewer regulations, and a better educated workforce). I wonder, though, whether the company should be more heavily focused on thinking through any change that need to be made to the global parts of its supply chain given isolationist pressures. My fear for UTX would be that the U.S. actually does go through passing more protectionist trade policies in which case UTX’s imports from China and other countries would become much more expensive. While focusing on improving production processes in the U.S. solves one part of the problem, it seems like more can be done to either cut costs and redesign parts of the supply chain that are currently overseas. I’d be curious to learn more about what actions, if any, the Company has taken in this respect.

On November 27, 2017, Sir Cranberry commented on Where in the world will our wine come from? :

Really interesting, thanks for sharing! My first thought upon reading this article is whether, in addition to changing the location of growth and the type of grape, there have been advances in technology that make it easier to protect crops from the impact of climate change. At a fundamental level, wine production is really an agricultural process, and it would seem that the broader agricultural/food industry is facing similar problems that wine producers are facing. As such, I’d imagine that there is currently significant investment from large food companies in technologies and processes to facilitate the production of good crops amidst a changing climate. One worry I have around wine that other agricultural companies may not face is that consumers may be reluctant to show the same “respect” for wine that they view as being produced in an “artificial” or more digitized/technologically advanced way. Part of the allure of wine is the craft of production and I worry that the production changes required by climate change will ultimately hurt the brand of wine to the end consumer. As wine producers navigate this challenge, they will likely be looking to optimize around not just protecting their crop and production process, but also around managing the appearance of any changes to process as understood by the consumer.

On November 27, 2017, Sir Cranberry commented on A Whole New World: The Digital Evolution of Disney :

Thanks for sharing this article about the challenges facing Disney as the delivery mechanisms of media content change rapidly. I had not appreciated the way in which Netflix, Hulu, and other OTT’s pose a threat to Disney’s business model. Disney built its iconic brand and market position by differentiating itself through content production and it seems that it will need to continue to pursue this strategy to sustain the business going forward. I am intrigued that Disney has decided to partner with and acquire streaming services. My perspective is that they should continue to partner with market leading streaming services and provide their content over multiple services as opposed to making their content exclusive with particular services (to the author’s first question). It seems unlikely that there will be only one winner in the OTT race, and if Disney is able to develop partnerships with many of these players to deliver its differentiated content, it can position itself with more leverage as it encourages OTTs to negotiate with each other to partner with Disney to deliver different types of content that it produces. Disney’s core competency has been, and should continue to be, in content production and if I were on the Board, I would not advise building an OTT organically; rather, I would encourage the Company to continue to invest heavily in content development while fostering strong relationships with leading OTTs.