UserError's Profile

The tragedy of rising cocoa prices (and its implication on my own consumption) aside, Cadbury has a critical social obligation: continue providing delicious sweets to those of us that depend on them.

While the case does not segment sales, I imagine that the EU makes up a significant portion of their revenue base. If I were Cadbury, I would be attempting to localize my supply chain within the borders of the EU rather than expanding factories in England. Regardless of a hard or soft Brexit, labor costs and tariffs will almost certainly increase. Cadbury should maintain the ability to meet demand on both sides of the English channel, but should focus on immediately shifting capacity to the EU. Price sensitive consumers will not tolerate rapidly increasing candy prices due to regulatory changes. Rather than risk a droppoff in revenue, Cadbury should begin scaling EU operations now.

Interesting read. I think the biggest risk to using a short feedback loop (customer preference) to determine the production of art (content generation) is a long term loss of innovative and diverse viewing experiences. While the rapid production cycle allows studios to capture the momentum of customer preference trends, they cede the power to create trends. Eventually, this leads to the homogenization of the art form, and (in my opinion), its eventual death. Rather, studios should work to offer and promote new art (even if its heavily commercialized) in order to introduce consumers to new and interesting material that they did not know they want.

While Nike’s changes seem to accede to trends in customer preferences towards sustainability, I wonder how much they are simply attempting to reduce costs while maintaining a positive brand image. I admire their innovation and willingness to enforce stringent sustainability standards, but so far the changes seem to be at minimal cost (and increase the overall margins of the business). The expanded use of recycled materials, reduction in energy use, and diversification away from cotton dependence are smart business decisions regardless of sustainability. However, the maker app is perhaps the most innovative. People respond to real time feedback, so shortening the feedback loop between design decisions and environmental impact is something that should be integrated across other companies, elevating the importance of sustainability on design.

From a practical perspective, Exxon faces significant geopolitical risk as energy prices remain low and broad trends move in favor of clean/renewable energy. As access to information reduces the distance between oil companies (and those directly affected by their practices) and consumers, I believe consumers will continue to demand more stringent standards. As CC wrote, this will very likely result in large quantities of stranded oil, greatly reducing the value of companies like Exxon. Therefore, Exxon should move aggressively into clean energy, where it can take advantage of rapidly expiring tax credits to fund long term projects. Regardless of the social good, Exxon should have the foresight to build a sustainable financial future through sustainable energy.

Great article! While I agree with the comment above that it is unclear if P&G is becoming a retailer, I definitely believe that they should. In the short term it is easy to argue that it is not their core competency, so they should avoid a potentially inefficient and unprofitable venture into an arena saturated with ultra-low cost retail/distribution companies (or rather, one company). However, I believe that as Amazon continues to grow its own ability to produce goods it will eventually compete head to head with companies like P&G. Thus, P&G must learn to distribute its own goods. Better to develop that expertise now than later…

Great read! Protectionism will certainly increase costs for the company (and thus the customer) in all geographies as GM will no longer be able to optimize its supply chain. However, I do think these costs will be mitigated by a few factors:
1) As mentioned above, increased automation has the potential to mitigate the increased labor costs of local manufacturing. While it will hurt the overall volume of jobs produced, the savings for the consumer will be realized quickly.
2) Increased adaptability in manufacturing. As manufacturing technology continues to improve, production processes will become more adaptable, reducing the cost of changing the model/type of vehicle produced at any given factory and optimizing production for the “local” market. This would allow GM to provide more value to its customers (by producing exactly what they want) and reduce distribution costs (by producing it as close as possible to the end consumer).