How they boost income: 19-August-08
Sourav Mitra -
Tuesday, August 19, 2008 10:05 PM
Hyundai and Kia, South Korean carmakers of the Hyundai Group:
1. They have spent billions to go upmarket: Hyundai's new Genesis sedan will start at $33,000. Kia's new Borrego midsize SUV will start at $31,745
2. They will not abandon its strength in entry-level models
3. They are focused on fuel-efficiency and Hyundai is only a fraction of a mile per gallon Honda and Toyota.
4. They have improved product quality and some Hyundai and Kia models are among the leaders in J.D. Power quality surveys in the U.S.
5. They will more than double its factory capacity from 2001 levels to about 6.7 million by 2014 including joint ventures in China.
[Click here for full story at Businessweek.com]
Wider income stream + improved products + aggressive expansion = more scope for more income
[More investment = more income (if demand exceeds supply); but more over-investment = more expenses that cannot be recovered (if supply exceeds demand)]
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BHP Billiton, the Anglo-Australian mining giant:
1. It is trying hard to buy rival Rio Tinto with a $150 billion bid to create the world's largest mining company
2. It has a diversified portfolio of businesses and none of its three major business areas - base metals (copper, nickel, etc.), petroleum, and iron ore - constitutes more than a quarter of total revenues so that it is less susceptible to market volatility
3. It negotiated a near doubling of contract iron ore prices with Chinese industrial giant Baosteel.
4. It has cashed in on rising commodity prices
[Click here for full story at Businessweek.com]
Raising and re-negotiating selling prices = more income
Acquiring rivals = scope for linear, synergic and accretive growth
Wide, equally balanced income streams = scope for steady future income
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IBM, infotech giant:
1. It is focusing on forming partnerships to take its speech recognition and translation technologies to market, while spreading the risk, and improving ability to address the relatively small niche markets that include applications including autos, mobile phones, call centers, medical systems, and transcription services.
[Partners include Vlingo, PhoneTag, and Jajah]
2. It has built some of the technology into products sold by its software and services business.
3. It is focusing on commercial opportunities right now.
4. Its researchers are also exploring areas where the social impact could be huge - like creating Web pages and searching the Web purely with voice that could be a boon for illiterate people with access to a phone.
[Click here for full story at Businessweek.com]
Product differentiation = scope for more income (when the time and infrastructure available is right)
Cooperation = wider mastermind + wider resources + wider commitment = scope for more income
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HSBC Holdings Plc, Europe's largest bank:
1. It will have 100 outlets in China, the world's fastest-growing major economy, by 2009.
2. It is expanding in second-tier cities in India
3. It will acquire 73.2 percent of Indian brokerage IL&FS Investsmart Ltd. for $237 million.
4. It may buy Lone Star Funds' 51 percent stake in Korea Exchange Bank for $6.02 billion.
5. It will hire in the high-growth areas such as China and India
[Click here for full story at Bloomberg.com]
Expansion + acquisitions in high-growth regions = scope for higher income growth
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Apple, converging technology company:
1. It built in a kill switch in the iPhone that lets it disable applications it considers malicious, even after they've been downloaded onto a subscriber's phone.
2. It collects first hand data about its customers' tastes in music, games, productivity applications and infrastructure environment on the basis of what is downloaded from iTunes and how long it takes to download to be super-responsive to glitches and push software updates onto phones.
[Click here for full story at Businessweek.com]
More info = more control
(Control compels events to conform to plans - even income plans.
Privacy evangelists: enter cyber world at your own risk)
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Newcrest Mining Ltd. and Lihir Gold Ltd., the two biggest gold producers on the Australian stock exchange:
1. Both companies closed forward sales contracts last year to take advantage of a doubling in bullion prices in the past three years. Newcrest bough back A$1.7 billion of forward sales contracts in June.
2. Both companies are trying to boost production aggressively to record levels. Lihir bought Equigold NL to add projects in Ivory Coast and Australia.
[Click here for full story at Bloomberg.com]
Closing forward sales contracts in times of rising selling prices = income boost
More production = more income (IF demand exceeds supply)
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Coca-Cola Co., beverages giant:
It spent $400 million on Olympic marketing for sponsorship rights, advertising and promotions and gained on rival Pepsi
[Click here for full story at Bloomberg.com]
More promotions = scope for more income (but at a cost)
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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