ZW's Profile

This article is very informative in Colgate’s business and its initiatives to combat environmental challenges. I am also curious to learn more about 1) why Colgate chose water consumption as a particular focus 2) what measures have Colgate taken to get their suppliers on board with their long-term ambition. Among the author’s recommendations, I find lobbying for change very interesting. It seems to be a great way to impose change on the industry. However, it is unclear to me what Colgate’s incentive would be to invest in this, and whether Colgate should diminish its own advantage in public perception by getting others on board too.

It is very interesting to see Famoso demonstrating its social responsibility by funding researches. It reminds me of IKEA who is also extremely socially / environmentally responsible in its wood supply. I think the author’s recommendation is similar to what IKEA did in reality, which is reinforcing a long-term approach to sourcing by imposing strict rules on every step of the value chain.

The author captured an interesting recent incident in the Chinese market. The last two questions are worth reflecting for all companies reliant on the market, especially in consumer goods. However, Lotte’s unfortunate fate is not new. Japanese companies have also suffered before in multiple periods in the past decade because of political tension. 7-11 is a very similar example – some stores closed while others took any Japanese branded items off the shelf, leaving more than half the store empty. To comment on the author’s last question – is it rising nationalism? I think not. The act of boycotting a foreign brand is not a new phenomenon in China. With endless choices in the market, Chinese consumers can easily find alternatives when they wish to. Is it an one-time incident? Again, I think not. Chinese consumers are likely to continue voting with their feet in times of diplomatic friction. That said, I sympathize with Lotte because indeed THAAD is not an issue one company can solve. However, too many companies think they can gain more return in the good times and not lose more in the bad times. Too many times we see on the papers that when the Chinese market doesn’t perform as expected, companies blame the market, and not reflect on themselves. To relate to what we have discussed in FIN, China is a investment with a large beta. Companies should realize it’s high return AND high risk. To order to mitigate idiosyncratic risks, it is important to create a balanced portfolio, much like what Lotte is doing by investing in other smaller markets.

I think the questions the author posed at the end are very interesting, and can potentially be stronger action plans than the recommended ones now. I think Disney is at a good position to take on HBO and Netflix in terms of creating original content, because they are potentially only playing the investor’s role, just as Netflix is. Disney can go after the same projects as Netflix, and come out winning the bid because of advantage in capital. The challenge would be to acquire contents that are consistent with Disney’s brand name. Acquiring an OTT platform is also promising. With numerous players in the market, including Netflix, Hulu, Amazon, it would be hard for Disney to join the game at this stage offering the limited selection of contents of its own. Therefore, being a shareholder is a good idea, in order to enter the market and to protect its brand. The Disney quotes are a nice touch to the article.

L.L. Bean’s approach to digitalizing its supply chain reminds me of the Barilla case in many aspects. Both emphasize the importance of information sharing throughout the supply chain. With collaborative parties prioritizing collective cost, the natural solution would be to share, plan, and optimize together to become agile and lean at every step of the chain.

The essay captures an interesting trend in the entertainment industry with regards to supply chain. However, I would challenge the author’s recommendation in the following aspects:

1. If the Chinese government has that much of censorship of content creation, how confident is the author in recommending building local production infrastructure that would be approved by the government? Furthermore, would it be cost efficient to do so? My assumption would be no to both questions.
2. Is it really to WB’s advantage to cater to local market with local content given local competitors? The top grossing film in China in 2017 is a locally produced film funded by 21 Chinese companies. It seems challenging for WB to go at making local contents alone if it’s objective is still to maximize return. But the author brings up a good point of IP protection, but at what cost? Or should WB continue to supply Hollywood content to “western obsessed Chinese consumers”? I see WB with a stronger competitive advantage at this, but I question how western obsessed Chinese consumers really are. With recent records of top grossing films in China, I think the answer is not much.
3. Does Chinese studios investment’s in Hollywood films have any impact on the bilateral relationship? With a similar purpose – trying to learn and eventually get ahead of Hollywood studios, Chinese production companies are actively investing in Hollywood films. Perhaps Chinese government would be hesitant to make its relationship with western entertainment industry any more tense than it has been before.