Strategy Muse

How they boost income: 27-August-08

2008-08-27T16:11:00Z

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

* * * * * * * * * *

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

* * * * * * * * * *

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.)

* * * * * * * * * *

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

* * * * * * * * * *

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.

* * * * * * * * * *

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?

* * * * * * * * * *

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

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Pick of the Week 13

2008-08-24T11:12:00Z

INCOME BOOSTING STRATEGIES

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

* * * * * * * * * *

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

* * * * * * * * * *

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)]

* * * * * * * * * *

H.J. Heinz Co., the world's biggest ketchup maker that is very diversified:
1. It boosted U.S. sales with lower-calorie brands such as Weight Watchers
2. It offered more products in emerging markets.
3. It raised prices to counter rising costs for transportation fuel and corn sweetener used in condiments.
4. It keeps looking for opportunities to expand and grow through acquisitions

[Click here for full story at Bloomberg.com]

Customer focused products + wider product offerings = scope for more income
Raising prices for rising costs = income imperative
Acquisitions = scope for linear, synergic and accretive growth

* * * * * * * * * *

Shottenstein Stores, a private equity firm from Ohio that made its money as liquidators:
1. It buys well-known brands that have fallen on hard times and turns them around or sells their merchandise off.
2. It moved into the luxury market by creating the Schottenstein Luxury Group and acquiring Judith Lieber, which makes designer clothes, handbags, and jewelry, and Italian designer label Shiro, which specializes in handbags.
3. It has now acquired Steuben Glass, the high-end glassmaker, from Corning
4. It will grow Steuben Glass and keep it based in Corning
5. It will open new Steuben Glass stores
6. It will expose Steuben Glass Steuben to newly rich consumers in countries such as China, Russia, and the United Arab Emirates.
7. It increased salaries by 3% a year and will maintain benefits.

[Click here for full story at Businessweek.com]

Ability to give life to dying business = long source of income
Moving onto luxury goods + opening new stores + expansion in growing economies = larger income streams (as long as demand exceeds supply)
Keeping employees motivated with raises and benefits = better products = more income

* * * * * * * * * *

Blizzard Entertainment, creator of a string of best-selling, industry-shaping PC games including the world's most popular and profitable online game, World of Warcraft:
1. It makes fun games that are easy enough for casual players and deep enough to attract and hook hard-core players (Simple to learn, difficult to master is the holy grail of game design)
2. It champions creativity, both productive and experimental, inspiring enduring devotion from paying players. It gets improvements from employees who endlessly play and replay games both on and off the clock
3. It remains in touch with players effectively and persistently. (Betas of future expansions to World of Warcraft include reporting software that allows players to offer instant feedback from within the game).
4. It keeps releasing improved sequels to popular games to keep the titles competitive and to keep players paying the monthly subscription fees.
5. It spends on development like blockbuster Hollywood releases or major corporate product rollouts.
6. It cans numerous products, even nearly finished games it deems "not fun enough."
7. It has entered a $18.9 billion merger with Activision, primarily a maker of console titles such as Guitar Hero and Call of Duty - a rare union of two well-oiled machines

[Click here for full story at Businessweek.com]

Fun product with wide appeal = wider customer delight = more income
Intense creativity + co-creation + heavy development spends = better product = more income
Continuous product improvement = sustained customer delight = sustained income
Terminating substandard products = sustaining high income streams
Teaming up with another industry icon = linear, synergic and accretive income growth

* * * * * * * * * *

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

* * * * * * * * * *

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

* * * * * * * * * *

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]
http://www.businessweek.com/bwdaily/dnflash/content/aug2008/db20080822_725647.htm?chan=top+news_top+news+index_news+%2B+analysis

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

* * * * * * * * * *

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]

* * * * * * * * * *

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

* * * * * * * * * *

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 product activation time = customer delight = more income
Less downtime to rectify product defects = more income (share of wireless carriers' fees)

* * * * * * * * * *

Bramdean Alternatives Ltd., Nicola Horlick's money-management firm:
1. It constantly fine-tunes its transitional portfolio to the market environment to respond to the funding requirements of the private equity investments
2. It pulled money out of hedge funds run by Nobel prize-winner Myron Scholes and James Dinan and Enso Global Equities Fund and Oak Hill Credit Alpha Offshore Ltd. to focus on more defensive funds for capital preservation as market volatility increases.

[Transitional portfolios invest money set aside for private equity commitments. Buyout firms typically take as long as five years to draw down the money investors commit to a pool.]

[Click here for full story at Bloomberg.com]

Continuous monitoring and tweaking is the only secret of making money from money's journey through time and yield fields.

* * * * * * * * * *

Ebay, the online auction giant:
1. It wants to increase the inventory of items for sale and attract more buyers.
2. It will imitate Amazon and court users who sell at fixed prices.
3. It will make it easier to list items for sale at a fixed price
4. It will slash the upfront fees it charges to list sale items by as much as 75%, while increasing its final sales commission.
5. It instituted a ratings system that makes it easier for buyers to leave bad reviews without fear that the seller will flag them as a problem shopper to help identify risky sellers
6. It added a search system that de-emphasizes sellers with bad ratings
7. It has pledged that its online system, PayPal, will refund money from fraudulent transactions

[Click here for full story at Businessweek.com]

Acquiescing and changing to market preferences of business model and offering incentives for the transition = more income
Making the business model more fair and healthy = customer appeal = more income

* * * * * * * * * *

Erento, a one-stop shop for leasing everything from wedding dresses and Apple iPhones to karaoke machines and heavy construction equipment:
1. It created an online rental marketplace that draws suppliers from so many areas. It enables anyone to become a rental supplier.

[8,000 European rental companies have elected to use erento as a sales channel. It now lists more than one million items across 2,200 product categories and claims up to 50,000 visitors a day. It is about to add cocktail dresses and jewelry. Rental suppliers upload their items, including an image, item description, and price for the rental duration. Renters then search and find their desired items according to location and price.]

2. It charges a display fee of 69¢ per item and takes a 4.9% cut of the rental price of any item procured through its site
3. It will expand its existing service in Europe first and then tap the U.S.

[Click here for full story at Businessweek.com]

Servicing human needs = key to income
Expansion into growing markets = more income

* * * * * * * * * *

Baugur, the Icelandic retail investment group with strategic investments or controlling stakes in retailers, department stores, jewellery chains, womenswear chains, and fashion conglomerates:
1. It makes an overwhelming majority of its investments in food, department stores and fashion chains.
2. It made an offer to purchase Woolworths' retail division to manage it more efficiently, with better ranges and availability. It will not put frozen food into a large number of Woolworths stores
3. It lets the management teams of its retail investments get on with the day-to-day job of running the business.
4. It uses its international presence to further export its brands overseas - it will launch Hamleys in India, after opening stores in Jordan.

[Click here for full story at Businessweek.com]

Focusing on core competence areas + making acquisitions that it can add value to + using international presence to further increase international growth = scope of greater growth of income
Giving management teams freedom in day-to-day jobs = ambivalent impact on income depending on circumstances and people involved

* * * * * * * * * *

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)

* * * * * * * * * *

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

* * * * * * * * * *

COST SAVING STRATEGIES

Fresenius, the health-care company best known for its kidney dialysis products and services:
It exploited the exchange rate (strong euro, weak dollar) to make a major acquisition - U.S. drugmaker APP Pharmaceuticals - for $3.7 billion.

[Click here for full story at Businessweek.com]

Purchases in weak currency countries = cost savings

* * * * * * * * * *

Hyundai and Kia, South Korean carmakers of the Hyundai Group:
They share engines and some components though they are largely separate.

[Click here for full story at Businessweek.com]

Sharing engines and components = savings of development costs and greater benefits of scale

* * * * * * * * * *

Grindrod Ltd., Africa's largest shipping company:
It will avoid the increased raw material costs of building new vessels by buying rivals to expand

[Click here for full story at Bloomberg.com]

Finding ways to avoid rising raw material costs = cost savings
(Will not the rising prices be factored into the selling prices of the rivals it seeks to buy out?)

* * * * * * * * * *

Tata Motors Ltd., the Indian automaker planning to introduce the $2,500 Nano car later this year:
It may move its Nano plant from the state of West Bengal to avoid protests stemming from its factory land dispute even though it has already spent $346 million on the factory.

[Click here for full story at Bloomberg.com]

Avoiding dispute = saving of cost of litigation, delay and disruption.

* * * * * * * * * *

Reliance Industries, India's largest private sector company that is highly profitable but still under increasing cost pressures:
1. It has always been very prudent about costs. It has set world records in low project execution costs.
2. It has taken up high costs as a major issue, especially in its subsidiary Reliance Retail to cut down avoidable costs
3. It has issued strict guidelines on unnecessary travel, mode of travel, courier despatches, use of stationery in office, use of cabs and type of accommodation while on tour, and even on the number of times employees can have tea and coffee.
4. It is seeking to reduce travel through video-conferencing.
5. It will issue only blue and black ball pens. It will not give calculators, tissue boxes, gel pens and uniball pens. It is encouraging employees to opt for pen refills and not to print in hurry to avoid unnecessary wastage of paper.
6. It will serve tea and coffee only in meeting rooms and visitor's rooms. The rest will be on self-service. Water bottles will be filled only once in the morning
7. It is seeking joint ventures with foreign retail companies to stabilize the supply chain
8. It is extending the austerity measures to the oil and gas business.

[Click here for full story at Businessweek.com]

Real intention is the seed of real cost savings.
(But sometimes it augurs a sense of depression.)

* * * * * * * * * *

Office of Government Commerce, the British government's buying body:
It resorted to reverse e-auctions for 5,000 laptops and 5,000 PCs (for all public sector customers) and achieved savings of 50 per cent on the laptops and 20 per cent on the PCs. And there will also be a range of upgrades available, which will be offered at discount prices.

[Reverse auctions force suppliers to bid decreasing prices for the contract offered, in response to competitors' bids. Only the buyer can see who is offering each price.]

[Click here for full story at Businessweek.com]

Is this more efficient and dynamic than sealed tender procedures?

* * * * * * * * * *

AnnTaylor Stores Corp., the clothing retailer that targets women 25 to 55:
1. It is embarking on a restructuring program that will save $20 million to $25 million this year and at least $50 million before taxes by 2010.
2. It cut inventory
3. It will reduce the number of products offered
4. It closed unprofitable locations and will close more under-performing stores
5. It repurchased shares.

[Click here for full story at Bloomberg.com]

Restructuring + cutting inventory + reducing the number of products offered + closing unprofitable locations = cost savings
Repurchase of shares = lower cost of finance if idle funds in the business cannot be more profitable invested

* * * * * * * * * *

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

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How they boost income: 23-August-08

2008-08-23T16:47:00Z

[Click here for full story at Businessweek.com]

* * * * * * * * * *

[Click here for full story at Businessweek.com]

Servicing human needs = key to income
Expansion into growing markets = more income

* * * * * * * * * *

[Click here for full story at Businessweek.com]

* * * * * * * * * *

[Transitional portfolios invest money set aside for private equity commitments. Buyout firms typically take as long as five years to draw down the money investors commit to a pool.]

[Click here for full story at Bloomberg.com]

Continuous monitoring and tweaking is the only secret of making money from money's journey through time and yield fields.

* * * * * * * * * *

MPC Synergy Real Estate SA, a joint venture of Germany's MPC Capital AG and Synergy Asset Management of Switzerland:
1. It seeks to benefit from the demand for offices and new homes in India, which will need 55 million square meters of new office space over the next five years
2. It will invest $298 million in Phoenix Mills Ltd., the second-worst performer on India's main realty index, and acquire stakes of 10 percent to 49 percent in 21 projects of Phoenix Mills and its units across India
3. It will also invest in EWDPL Group, 42 percent owned by Phoenix Mills

[Click here for full story at Bloomberg.com]

Participating in 'high demand low supply' markets = more income

* * * * * * * * * *

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

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How they control cost: 23-August-08

2008-08-23T16:39:00Z

[Click here for full story at Businessweek.com]

Real intention is the seed of real cost savings.
(But sometimes it augurs a sense of depression.)

* * * * * * * * * *

[Reverse auctions force suppliers to bid decreasing prices for the contract offered, in response to competitors' bids. Only the buyer can see who is offering each price.]

[Click here for full story at Businessweek.com]

Is this more efficient and dynamic than sealed tender procedures?

* * * * * * * * * *

AnnTaylor Stores Corp., the clothing retailer that targets women 25 to 55:
1. It is embarking on a restructuring program that will save $20 million to $25 million this year and at least $50 million before taxes by 2010.
2. It cut inventory
3. It will reduce the number of products offered
4. It closed unprofitable locations and close more under-performing stores
5. It repurchased shares.

[Click here for full story at Bloomberg.com]

* * * * * * * * * *

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

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How they boost income: 22-August-08

2008-08-22T16:37:00Z

[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)

* * * * * * * * * *

[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

* * * * * * * * * *

[Click here for full story at Bloomberg.com]

[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]

* * * * * * * * * *

[Click here for full story at Businessweek.com]

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

* * * * * * * * * *

[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

* * * * * * * * * *

[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

* * * * * * * * * *

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.

* * * * * * * * * *

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

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How they control cost: 22-August-08

2008-08-22T16:31:00Z

[Click here for full story at Businessweek.com]

Purchases in weak currency countries = cost savings

* * * * * * * * * *

Hyundai and Kia, South Korean carmakers of the Hyundai Group:
They share engines and some components though they are largely separate.

[Click here for full story at Businessweek.com]

Sharing engines components = savings of development costs and greater benefits of scale

* * * * * * * * * *

Grindrod Ltd., Africa's largest shipping company:
It will avoid the increased raw material costs of building new vessels by buying rivals to expand

[Click here for full story at Bloomberg.com]

Finding ways to avoid rising raw material costs = cost savings
(Will not the rising prices be factored into the selling prices of the rivals it seeks to buy out?)

* * * * * * * * * *

[Click here for full story at Bloomberg.com]

Avoiding dispute = saving of cost of litigation, delay and disruption.

* * * * * * * * * *

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

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How they boost income: 21-August-08

2008-08-21T16:00:00Z

[Click here for full story at Businessweek.com]

* * * * * * * * * *

[Click here for full story at Businessweek.com]

* * * * * * * * * *

[Click here for full story at Bloomberg.com]

Customer focused products + wider product offerings = scope for more income
Raising prices for rising costs = income imperative
Acquisitions = scope for linear, synergic and accretive growth

* * * * * * * * * *

Massmart Holdings Ltd., South Africa's largest food and goods wholesaler:
1. It increased prices at outlets such as Makro and Cash and Carry because of rising food costs.
2. It will 10 additional stores in other African countries in addition to the existing 13 Game stores in countries including Namibia, Botswana, Zambia, Nigeria and Ghana.

[Click here for full story at Bloomberg.com]

Increase in selling prices for rising costs = income imperative
More outlets = more income (if demand exceeds supply

* * * * * * * * * *

Grindrod Ltd., Africa's largest shipping company:
1. Its shipping division plans to expand by buying rivals
2. Its freight-services division is expanding the Richards Bay terminal's annual capacity to 4 million metric tons

[Click here for full story at Bloomberg.com]

Business expansion = more income (as long as demand exceeds supply)

* * * * * * * * * *

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

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How they boost income: 19-August-08

2008-08-19T16:35:00Z

[Click here for full story at Businessweek.com]

* * * * * * * * * *

[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

* * * * * * * * * *

[Partners include Vlingo, PhoneTag, and Jajah]

[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

* * * * * * * * * *

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

* * * * * * * * * *

[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)

* * * * * * * * * *

[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)

* * * * * * * * * *

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)

* * * * * * * * * *

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

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Pick of the Week 12

2008-08-16T06:12:00Z

INCOME BOOSTING STRATEGIES

Food companies, faced with limits on junk food ads on TV because of the worry that bombarding kids with ads for non-nutritious foods fuels the obesity epidemic:
1. They now market junk food to kids via the Web partly because there are no rules reining in advertising online.
2. They spread messages through social networks where kids create the ads and share them with their friends
3. They reach young people with behavioral targeting, which delivers ads based on a person's Web-surfing habits.

[New online advertising techniques let food marketers reach more kids and teens, for longer periods and for a fraction of the cost than in the past.]

[Click here for full story at Businessweek.com]

Is it appropriate to circumvent the rules to boost income?

* * * * * * * * * *

Tesco Plc, the U.K.'s biggest supermarket chain, currently barred from opening their own outlets in India and buying stakes in local store owners:
1. It will expand in India, where chain-store sales may surge more than eightfold to $97 billion by 2012, with a chain of wholesale stores in partnership with Tata Group's Trent Ltd.
2. It will invest $114 million over two years and give Trent advice and technical support in expanding its Star Bazaar superstore chain.
3. It will sell groceries and other goods to small retailers and restaurant owners and supply Star Bazaar (a Trent unit) which aims to expand to 50 stores across India in five years from the current four.

[Foreign retail companies are permitted to start wholesaling joint ventures under current Indian law.]

[Click here for full story at Bloomberg.com]

Expanding in growing markets even within the limits of the law = more income

* * * * * * * * * *

WPP Plc, the world's second-largest advertising company:
1. It is expanding operations in Africa.
2. It bought a 27.5 percent minority stake in Scangroup Limited, a Kenyan advertising and marketing firm, which employs more than 300 people in Kenya, Uganda and Tanzania

[Click here for full story at Bloomberg.com]

Finding growing markets for expansion = finding growing income streams

* * * * * * * * * *

Soho China, Hong Kong-listed commercial property developer:
1. It focuses on commercial mixed-use properties in Beijing that include retail space as well as integrated office and residential units.
2. It focuses on prime locations - particularly the city's central business district
3. It will increase the portion of investment properties on its books instead of selling of all its property projects because of the optimism about the rental development for prime retail space. It will hold about 1 million square metres of commercial space in central Beijing in five years.
4. It continues to manage the properties that it has sold, including helping the buyers to lease them out.
5. It sells its properties on a strata basis to individual investors who typically don't buy for their own use.
6. It will take advantage of the temporary distress in the property market by making more acquisitions while the competition is finding it hard to come up with the financing.

[Click here for full story at Businessweek.com]

Wide scope of business at prime locations + venturing into new high value businesses + retaining income streams from sold projects + taking advantage of financial muscle = more income

* * * * * * * * * *

United Airlines, beleaguered U.S. airline with a $2.7 billion quarterly loss, which analysts believe should be liquidated:
It sued to block the pilots' union from continuing work slowdowns and sickouts that prompted 330 flight cancellations affecting 36,000 travelers.

[Click here for full story at Businessweek.com]

Removing business obstacles = some scope for income

* * * * * * * * * *

Ebay, e-commerce giant:
1. It is on the lookout for and will acquire stakes in companies that can expand its core shopping business to new markets
2. It is stepping up overseas expansion efforts and increasing its presence in Asia where local competitors have strong ties to users, to counter competition for Asian e-commerce from Yahoo!
3. It will acquire a 36.4% stake in Korean e-commerce giant Gmarket. (It has used minority stakes in the past as a precursor to acquisition or attempted takeover)
4. It will use its growing cash pile to fuel this growth

[Click here for full story at Businessweek.com]

Expanding in the core competence zone + expanding in growing markets = more income

* * * * * * * * * *

CSM NV, the world's largest supplier of ingredients to bakeries:
It raised prices by more than 10 percent as wheat and palm-oil rose to records even though price increases are likely to hurt sales in the U.S.

[Click here for full story at Bloomberg.com]

Raising prices for rising costs = income imperative

* * * * * * * * * *

CSL Ltd., Australian health-care company, which is the world's second-largest maker of blood plasma products:
1. It will buy U.S.-based Talecris Biotherapeutics Holding Corp. (whose products are in the fastest-growing segments of the $15 billion global plasma-product market) to boost sales by more than a third and gain additional scale, breadth of products, geographical presence, low cost base and capacity to increase output to enhance its position in the global plasma products market
2. It will pay $3.1 billion in cash for Talecris. (And it will pay $75 million if regulators block the deal.)
3. It will raise $1.5 billion in a share sale and fund the rest of the acquisition with cash and a loan from Merrill Lynch & Co.

[Plasma is the watery liquid in which blood cells are suspended. Doctors are increasingly using plasma-based products to treat diseases in which immune cells attack the nervous system, such as MS and Guillain-Barre syndrome. The treatment is also being studied for Alzheimer's disease.]

[Click here for full story at Bloomberg.com]

Acquisitions with synergic advantages = scope for great income growth

* * * * * * * * * *

Strauss Group, an Israeli coffee outfit:
1. It has boosted income in the past through cooperation (with Danone in yogurt; with Unilever in ice cream).
2. It ventured into the larger and fragmented wholesale roast and ground coffee market instead of the instant coffee market dominated by Nestle and Kraft Foods.
3. It made acquisitions in countries where coffee drinking is either strongly entrenched or taking off in popularity with newly affluent consumers.
4. It formed a joint 50-50 venture with Lima Brothers in Brazil, established its own local coffee production and marketing facilities in Eastern Europe and acquired Cosant Enterprises in Russia for $93 million. It is trying to be the first on the ground in the potentially huge market in China
5. It diversified in the U.S. into hummus, a traditional Middle Eastern chickpea spread that has had rapidly increasing popularity. It has allowed Pepsico a 50% stake in the hummus subsidiary to expand in the U.S.
6. It is looking to expand its "Max Brenner" chocolate bars concept in the U.S. market after success in Israel, Australia, Singapore, and the Philippines.

[Click here for full story at Businessweek.com]

Diversification + cooperation/partnership + entry into stable markets + entry into emerging markets + entering fragmented markets = scope for more income

* * * * * * * * * *

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.

* * * * * * * * * *

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 own demand)

* * * * * * * * * *

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

* * * * * * * * * *

COST SAVING STRATEGIES

Boeing, airplane maker:
1. It is trying to convince its unions to accept defined-contribution pension plans in place of the traditional defined-benefit pension plans.
2. It will induct new staffers into a defined-contribution pension plan where Boeing's contribution will be limited, fixed, and predictable.

[Defined-contribution plans grow less, but free up company money (which Boeing wants to use for research and development or other purposes) because the company's financial responsibility is over after making the defined contribution

Defined-benefit plans require the company to set aside money for the plans whenever an investment, in the stock market or elsewhere, comes up short. This adds uncertainty to a company's budget because the company's responsibility is not over until employees receive their defined benefit. If the value of investments falls below the defined benefit, the company has to make good the difference.]

[Click here for full story at Businessweek.com]

Freeing funds from pension plans = cost savings

* * * * * * * * * *

Multinationals like Cisco, Motorola, General Electric, and Hewlett-Packard:
They are increasing R&D initiatives in India because:
a) The quality and experience of India's huge technical workforce is rising supplemented by an influx of returnees from the U.S., Britain, and Australia, many boasting years of managerial and R&D experience at Western corporations.
b) Salaries in India are still at the most about one-third of salaries in the U.S.

[Click here for full story at Businessweek.com]

Moving work to low cost regions = cost saving

* * * * * * * * * *

Toyota Motor Corp., the world's second-largest automaker:
1. It is responding swiftly to changing demand in North America
2. It will consolidate Tundra pickup truck production in Texas about six months earlier than scheduled and stop making the model in Indiana from November as demand for the model slumps

[Click here for full story at Bloomberg.com]

Responding swiftly to market forces = cost savings and / or income boosting
Stopping unprofitable businesses = cost savings

* * * * * * * * * *

Chrysler, carmaker and inventor of the minivan (one of the best-selling ideas in automotive history):
1. It is looking to cut costs and conserve cash.
2. It will save hundreds of millions or even billions of dollars in development costs for small cars and family sedans.
3. It will share its factories instead of losing money on them.

[Click here for full story at Businessweek.com]

Consciously seeking cost savings leads to cost savings
Not developing new products = cost savings that also rob the pipeline of future income
Finding uses for unutilized plant capacity = reducing costs that are not recovered

* * * * * * * * * *

PMI, the second-largest U.S. mortgage insurer:
1. It is withdrawing from overseas markets to focus on the U.S.
2. It is shutting its Canadian unit and closing sales offices in Europe.
3. It is selling its Asian and Australian mortgage insurance businesses to QBE Insurance Group Ltd., Australia's biggest casualty insurer

[Mortgage insurers pay lenders when borrowers default and foreclosure proceeds fail to cover costs]

[Click here for full story at Bloomberg.com]

Closing unprofitable operations = cost savings

* * * * * * * * * *

Lehman Brothers Holdings Inc., financial firm with exposure to the mortgage market collapse:
1. It is seeking to sell about $14 billion of its $40 billion in property related assets by the end of the year (it has a $29.4 billion commercial mortgage portfolio and $10.4 billion of property)
2. It has already trimmed the mortgage holdings by 23 percent
3. It has sold $147 billion of other assets
4. It has increased cash holdings

[Click here for full story at Bloomberg.com]

Disposing unproductive assets = cost savings
Increasing cash holdings = avoidance of value writedowns = cost savings

* * * * * * * * * *

1. Business strategies differ between businesses because the strategies adopted depend on the businesses' differing circumstances and aspirations
2. Business circumstances may be defined by a business's industry structure, bargaining power, threat of new competitors and threat of new products
3. Business aspirations may be defined by a business's mission, vision and plan

* * * * * * * * * *

For more posts about "How they boost income" and "How they control cost" please visit the URL below:
http://blogs.livemint.com/members/Sourav%20Mitra.aspx

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