How they boost income: 15-August-08
Sourav Mitra -
Friday, August 15, 2008 8:00 PM
Dell, computer maker:
1. It is trying to create a potent alliance among Apple's many rivals, from cell-phone makers and record labels to online music sites to persuade consumers to try new devices and services than Apple's iPod which is tied only to its iTunes.
2. It will create a broad standard, more open than Apple's, that will give people greater choice in how they buy and consume music, movies, and podcasts.
3. It will give other companies the software to help establish the standard and will make its money selling PCs and other hardware. The Zing software handles behind-the-scenes translations so that content can be "zinged" between computers and other compatible devices.
4. It will feature the Zing software on its small, cheap laptops expected in September and install it on all its consumer PCs by the end of the year.
[Click here for full story at Businessweek.com]
Creating a new consumption standard + aligning new products to new standard = scope for more income (if the new standard stirs up its own demand)
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Chrysler, carmaker and inventor of the minivan (one of the best-selling ideas in automotive history):
1. It is straying away from its roots as an innovator and turning itself into a marketer and contract manufacturer of other people's cars to plug holes in its truck-heavy lineup and facilitate its plans for overseas expansion.
2. It is negotiating with Nissan to start selling a version of the Altima family sedan.
3. It will make a restyled version of Nissan Motors' Versa subcompact.
4. It will become an assembler-for-hire for any maker to use its underutilized truck and minivan plants. It will build a version of its Dodge Ram pickup for Nissan and a minivan for Volkswagen.
[Click here for full story at Businessweek.com]
When the going gets tough it is necessary to find and capitalize on every income possibility. The proof of uniqueness is ultimately in selling and surviving. All other dimensions of uniqueness come later.
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QBE Insurance Group Ltd., Australia's biggest casualty insurer:
1. It has been looking to acquire businesses to sustain earnings growth (it has doubled profit through acquisitions at home and abroad during the past three years).
2. It will acquire the Asian and Australian mortgage insurance businesses from PMI Group Inc., the second-largest U.S. mortgage insurer, for $896 million to add to earnings-per-share in the first year of ownership. (It enters a market with a distressed seller and obtains a business at an attractive price)
[Click here for full story at Bloomberg.com]
Acquisition = scope for linear, synergic and accretive growth in income
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OAO KamAZ, Russia's biggest truckmaker:
1. It will upgrade plants and expand its production line to manufacture new models of light trucks and buses in partnership with Daimler AG
2. It will sell a 42 percent stake to Daimler
[Click here for full story at Bloomberg.com]
Partnership with a leader = more products + better products = more income (as long as demand exceeds supply)
Sale of stake = more commitment from partner = scope for more income
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Pfizer Inc., the world's largest drugmaker:
1. It will pay Cytos Biotechnology $137 million for access to experimental vaccines to treat human diseases not currently covered by Cytos' own drug development program.
2. It will be responsible for preclinical and clinical development, and also the manufacturing and marketing of the vaccines.
[Click here for full story at Bloomberg.com]
Adding to the probability of future income streams = more scope for future income
Would you say that outsourcing product-differentiating strategies is a strategic sin?
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For more posts about how businesses are boosting income and controlling cost please visit the URL below:
http://blogs.livemint.com/members/Sourav%20Mitra.aspx