Strategy Muse

How they boost income: 27-August-08

Coca-Cola, beverage giant, which seemed to have lost its design savvy in the absence of consistent global design standards:
1. It is trying to boost income through the marketing mileage of good design.
2. Its design leaders are tirelessly advocating good design.
3. It has begun a review of the 350 brands in the company's portfolio, focusing first on megabrands such as Coke.
4. It is implementing its design strategy surreptitiously by avoiding the word "design" as much as possible and talking about the benefits of smart design.
5. It has built up a team of 60 designers at four centers around the world focused on a "fix the basics" strategy.
6. It has avoided generating cool ideas and concepts that would never see the light of day.
7. It has focused on identifying basic problems that design can solve in three critical areas - brand identity, user experience, and sustainability - e.g. the aluminum contour bottle feels more modern, is less expensive to produce, feels colder than a bottle, has a re-sealable cap and is manufactured using recycled material and is itself recyclable.
8. It designed a set of panels that can be attached to older coolers to give them the modern look in cases where retailers are not upgrading to the new family of sleek, sculptural coolers that give the brand a bold presence, boast a more ergonomic door handle, LED lighting, and other technologies that reduce energy usage by 30% to 40%.
9. It has created a Web-based software tool that allows designers at the company's many bottling partners to create new bottle or can label designs or even promotional posters that will always conform to the global standards set by the corporate design team because of parameters built into the tool.

[Click here for full story at Businessweek.com]

Great design = greater recall factor = more income

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Amazon,com, online retailer:
1. It is trying to usher book publishing into the digital age with Kindle a paperback-size device that holds about 200 books, which Amazon sells for about $360. (A second improved and cheaper version may be released in September)
2. It is trying to enhance sales by adding community-building tools to its Kindle e-book store and tapping into traffic on Facebook by purchasing the Shelfari web site for an undisclosed sum. (Shelfari makes an application for Facebook that could help)

[Shelfari lets users organize online book groups and create "virtual shelves" of titles to share recommendations with fellow readers, who post profiles of themselves and tout their literary tastes.]

3. It paid $300 million for digital books-on-tape site Audible.
4. It will plug Kindle owners into a community of commenters to convince more users to pay $10 or so for new titles.
5. It will buy online used-book dealer AbeBooks, owner of a 40% stake in social media site LibraryThing.

[Click here for full story at Businessweek.com]

Leaping through new windows of opportunity = scope for exponential income growth if the product catches the human imagination, until wait-and-watch copycats throng the marketplace.
Bulwarking new product with maximum marketing support = more income

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Mattel Inc., the world's biggest toymaker, whose Barbie doll sales have slumped in part because of competition from the edgy Bratz dolls sold by MGA Entertainment Inc:
1. It obtained an award of $100 million (one-quarter of MGA's $405 million profit from the Bratz dolls) in copyright-infringement and contract damages for its claims that MGA's Bratz dolls are based on the work of a former Mattel designer.
2. It won $90 million for MGA's intentional interference with a Mattel designer's contract and helped him breach his fiduciary duty and his duty of loyalty to Mattel. It won $10 million on its copyright- infringement claims. 

[ The jury found that the designer conceived the Bratz characters and name while employed by Mattel.]

[Click here for full story at Bloomberg.com]

Being conscious of your rights = scope for income
(Please be careful of when and where you think up anything life-changing or world-changing.)

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China Mobile Ltd., the world's biggest phone company by users, facing rising competition after the government ordered smaller carriers to merge, forming three carriers that will offer mobile and landline services:
1. It cut call charges to win business from fixed-line rivals. (It added 22.5 million subscribers in the three months ended June)
2. It expanded networks to meet demand from rural areas.
3. It increased value-added offerings of non-voice services such as messaging and games to 27 percent of first-half revenue to counter lower profitability resulting from cuts in call charges.
4. It will seek quality telecommunications assets as investment opportunities.
5. It purchased Hong Kong's China Resources Peoples Telephone Co. in 2006.

[Click here for full story at Bloomberg.com]

Cutting prices = more market share and income at the cost of profit ratios
Expansion of service + rendering high value offerings = scope for income growth
Acquisition = scope for linear, synergic and accretive income growth

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Chase credit card:
It raised interest rates on credit card balances suddenly to 19.99% from 7.99% because of the overall turmoil in the credit markets.

[In addition, credit card companies allocate payments to the lowest interest-rate balance first, which leaves a lot of cardholders unable to make a dent in balances at higher interest rates.]

[Click here for full story at Businessweek.com]

Squeezing the customer = more income while customer is locked in = more incentive for the customer to break free as soon as possible = less income.

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Boeing, airplane maker:
It avoided a potential strike vote by the International Association of Machinists by yielding to the union's demands to keep a traditional pension plan, which becomes more expensive when shortfalls in the market value of the pension investments have to be made up and manifests uncertainties of how much it must contribute each year.

[Click here for full story at Businessweek.com]

Under what circumstances would you agree to long term costs in exchange for short term income?
Aren't there lessons to be learnt from General Motors' high wage agreements that have been crippling the company?

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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