Great article Jeff,
Building on Alvaro’s point, I wonder how much of management’s decision to move production to China was actually predicated on exporting those cars to the USA. According to me, more benefit can be derived by diversifying the consumption base and diversifying into growing markets such as China and India. Furthermore, labour costs in China have been rising rapidly over the last decade, and so I question the long term benefit of making vehicles in China to export to the USA.
Very interesting article!
The idea of finding alternative markets especially in countries such as China does not seem like the right strategy to me. Even though these countries might be a large demand driver, given their geographical distance from Mexico, I would be concerned about the risk of spoilage during transit periods. In my opinion, Mexican producers should try to build long-term contracts with major American retailers and consumers of avocados to safeguard the demand of their avocados. They could also look at countries closer to them, such as Canada, if they want to diversify their consumption market. Lastly, as mentioned by Cesario, marketing can be a critical tool in the USA to increase consumption of avocados and build customer habits toward avocados, which will help increase the price inelasticity of the product.
Interesting post Carolina,
I think HMG has a good short term plan to deal with potential water shortages. However, one thing they may have not taken into account is government regulation. We are assuming that they will be able to purchase water from the dam (the government) in case of successive droughts, however, government priorities may shift over time. The water in the dam could get earmarked for industrial applications for example if the water shortage gets too acute. This is a problem that was being faced in India last year. To deal with this, HMG could also maybe develop and construct a small dam of their own and harvest their own rain water. This would provide water security to them and also help reduce the risks associated with higher water costs.
I do agree with Shalei. While I admire Mars’ focus on reducing its GHG emissions and initiatives to educate local farmers in Africa through the Farmer Income Lab, I am concerned that with the impact of climate change, these regions will not be able to maintain their supply of cocoa. With this, it would be a good idea to diversify its sourcing base to other countries. I would also suggest working with cocoa bean producers and try to develop a bean that is able to grow with lower amounts of water and higher temperatures. This would go some way in reducing the impacts of climate change on cocoa bean production.
Thanks for the interesting post.
I definitely do think that augmented reality will be a great addition to the sales process and will only serve to enhance the premium brand image that BMW has built. However, I think it is a technology that should be used in addition to existing showrooms rather than in place of. Channelling a few learnings from marketing, I would assume that the ‘test drive’ would be a critical part of the consumer buying process for a BMW. Eliminating showrooms could have a detrimental impact on the consumer’s ability to test drive. AR would be great to grab attention and enhance the funnel of potential consumers looking to buy a BMW, who could then visit a showroom to test the car and complete the purchase, thereby increasing BMW’s incremental sales.
The scalability concern you bring up seems very relevant to me. What stood out to me was that Adidas decided to do this itself, by owning the factory rather than doing a pilot in collaboration with one of its manufacturing partners. Going forward, if they do expand this concept, will they put more investments in manufacturing and decide to own their own plants? Traditionally, apparel and shoe brands have shied away from owning their production facilities to the large capital investment as well as management bandwidth that entails. It also seems like, in order for this model to be successful, real time sales data need to be shared at the factory level (in order for them to project demand and get raw materials inhouse early). Therefore, if the final goal is to eventually outsource this model of manufacturing, will the company be willing to share such sensitive data? This could be a big barrier to scalability of this concept.