Strategy Muse

How they boost income: 22-August-08

Apple, converging technology company which launched its 3G iPhone this year:
1. It boosted its production plans when initial sales proved stronger than the company expected. It will build 40 million to 45 million iPhone 3Gs in the 12 months through August 2009 instead of the initial plan for 30 million units.
2. It will sell the iPhone 3G in an ever broader circle of countries. It was to sell in 20 more countries on Aug. 22. In 2009 it will also sell in Russia and China.
3. It expanded distribution to include 986 Best Buy stores.
4. It is reducing the physical process of activating the phone from 30 minutes (which is a bottleneck) to about 15 minutes.
5. It will resolve performance glitches (no 3G access, dropped calls, and frequent switching from 3G to slower 2G networks) with an electronically distributed software upgrade, rather than a product recall.

[Click here for full story at Businessweek.com]

More production = more income (if demand exists)
More markets tapped + more outlets = scope for more income
Reducing activation time = customer delight = more income
Less downtime to rectify product defects = more income (share of wireless carriers' fees)

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Fresenius, the health-care company best known for its kidney dialysis products and services:
1. It makes products and renders services, which people cannot scrimp on during a downturn, since doing so can be fatal, and many of which are paid for by health plans
2. It has acquired U.S. drugmaker APP Pharmaceuticals, which makes generic drugs that are administered intravenously, fitting well with its Fresenius Kabi unit's business of providing intravenous therapies and nutrition.
3. Its biotech division is developing new cancer therapies and drugs that help patients accept transplanted organs.

[Click here for full story at Businessweek.com]

Products immune to economic cycles = steady predictable income streams
Synergic acquisitions = scope for synergic income growth
Good products in pipeline = healthy future income streams

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Microsoft Corp., the world's largest software maker:
1. It is trying to grab consumers' attention with its Internet services amid mounting competition from Google Inc.
2. It introduced a free online program called Photosynth, which lets users combine collections of photos into movie-like three-dimensional images of places or objects and includes 20 gigabytes of storage.
3. It may develop a corporate version of the software.
4. It may be able to use the technology behind Photosynth to enhance mobile-phone searches. (It would allow people to take a picture of a building and then have their phone tell them where they are. Or they could snap a photo of a movie poster and see the film's trailer on the phone.)

[Click here for full story at Bloomberg.com]

5. It is trying to reverse the negative public perception of Windows Vista, the latest version of the company's personal-computer operating system with an ad featuring uber-successful comedian Seinfeld, and company founder Bill Gates

[Click here for full story at Businessweek.com]

Useful new products that fill a need + ads that have impact = more income
[But the vindication of celebrity endorsements is not complete]

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Boeing, airplane maker seeking more time to bid for the contract to build $35 billion worth of airborne refueling tankers, in competition with the Northrop Group and EADS alliance:
1. It has disclosed the intention to not bid for the contract if it is not allowed the time it requires to prepare its new proposals, betting that Congress will not tolerate a no-bid situation, preferring competition over a single-supplier award.
2. It had earlier protested a faulty award by the Air Force of the contract to the Northrop Alliance that led to a new competition.

[Click here for full story at Businessweek.com]

More time to make business proposal = better proposal = more scope for income

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WPP Group Plc, the world's second- biggest advertising company:
1. It has made purchases in Brazil, Russia, India and China to spur sales. It made 29 acquisitions and investments in the first half.
2. It made a 1.1 billion-pound hostile bid for market researcher Taylor Nelson Sofres Plc to merge Taylor Nelson with its Kantar market research unit to cut its dependence on ad revenue. (Market research is more resilient to an economic decline than other media businesses.)

[Click here for full story at Bloomberg.com]

Acquisitions in emerging markets = scope for higher rate of income growth
Acquisition of resilient businesses = steadier income streams

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Standard Bank Group Ltd., Africa's largest lender with operations in 18 African nations and 20 other mostly emerging markets:
1. It seeks acquisitions in faster growing emerging markets outside South Africa. It will focus on developing countries. (It has already bought businesses in Nigeria, Kenya, Argentina and Turkey)
2. It will spend $878 million in 18 months on acquisitions
3. It is seeking to tap rising trade in commodities and investment-banking fees

[Click here for full story at Bloomberg.com]

Acquisitions in faster growing emerging markets = faster growth of income
Participating in growing businesses = scope of more income

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Polo Ralph Lauren Corp., the designer of the U.S. Olympics team's official uniform:
1. It wants to increase European sales from 20 percent to 33 percent of revenue by increasing shipments to Harrods in London and opening a women's clothing store on Avenue Montaigne, Paris's premier high-fashion row.
2. It will open a new Paris flagship on the Left Bank in spring of 2009.
3. It aims to sell more at its existing European locations (16 stores of its own, and more than 2,000 other stores)

[Click here for full story at Bloomberg.com]

More stores + more shipments = more income, if demand equals or exceeds supply.

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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