Pick of the Week 9

Tag : Fabric Supplier

INCOME BOOSTING STRATEGIES

Independent coffee shops in the U.S. competing with Starbucks aretaking approaches that Starbucks hasn't:
1. Some are serving coffee differently from Starbucks.
[Lakota Coffee Co. in Missouri serves a latte in a signature largegreen bowl that requires two hands to hold and create a moreat-home atmosphere than Starbucks down the street. It also givescustomers real latte mugs.]
2. Some give customers free refills on coffee.
[Tocio's Sundance Café in Naples, Fla., offers customers unlimitedrefills for the $1.50 they pay for a 12-ounce coffee. When aStarbucks opened inside a Target next door it offered free coffeesto Target employees on break, since they weren't offered Starbucksdiscounts.]
3. Some serve a different type of product and have their own uniquestyle and brand.
[Jammin' Java, in Fayetteville, Ark., offers everything frombreakfast burritos to turkey sandwiches along with their coffee.Since a Starbucks opened nearby several years ago, it has expandedthe menu to include beer and wine.]
4. Some have a nimble management team to implement changes morequickly than bureaucratic corporations.
[Flying Star Café and Satellite Coffee in Albuquerque, keepschanging things to constantly offer something fun and unique. WhenStarbucks opened nearby it picked up on several of Starbucks'shortcomings and offered blended concoctions to complement coffeedrinks.]
5. Some differentiate by paying meticulous attention to the coffeeitself.
[Caffe Calabria in San Diego grinds coffee beans at differentsettings, based on the amount of moisture in the air, since waterpasses through the grounds differently when the humdity is higher.]
6. Some work to create loyal customer bases by emphasizing localties.
[Coffee by Design in Portland, Me., sponsors local artsorganizations and offers a grant each year to a Massachusettsartist (last year's grant was $2,800). It has given the store aunique following among local artists.]
[Click here for full story at Businessweek.com]

Income is in the focus, the differentiation, the freebies, thenimbleness, the relationships
Can't big business emulate such strategies at the local level byoffering store employees rewards for doing things out of the boxthat flood the income stream without upsetting the giantcorporation itself in any way?

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Big Pharmaceutical Companies, facing fewer prescriptions filled,patent expirations, and FDA rejections of new drugs:
1. They are continuing to consoldate (Roche has bid $44 billion forGenentech, Teva Pharmaceutical Industries has bid $7 billion forrival Barr Pharmaceuticals).
2. They are trying desperately to come up with substitutes for bigproducts facing patent expirations while the Food & DrugAdministration has become increasingly picky and cautious ingranting approvals.
3. They are diversifying well beyond prescription drugs so that noone product or business is likely to dominate the results
[Click here for full story at Businessweek.com]

Synergy + new products + wider income streams = more income
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Barry Callebaut AG, the world's biggest contract manufacturer andsupplier of bulk chocolate, fighting a 40 percent jump in cocoaprices:
1. It will focus on contract manufacturing and producingingredients such as cocoa butter and cocoa powder.
2. It bought or leased 10 factories, bringing the total to about40.
3. It has started factories in Russia and China
4. It will seek to benefit from the current outsourcing trend. Ithas signed its biggest outsourcing deal in 2007 with Hershey andwon new orders from Nestle SA, Cadbury Plc and Japan's Morinaga& Co. boosting annual sales by about 13 percent
5. It may win enough orders to operate the new factories near fullvolume in three to five years
[Click here for full story at Bloomberg.com]

B2B transactions = somewhat easier inflationary pricing = moreincome
More production = more income (if demand exceeds supply)
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Hedge Funds:
They borrowed almost 15 per cent, or about 550 million, of HBOSshares, which faced intense pressure from investors betting on theshare price falling, and sold them to be able to buy them backcheaper.
[Short sellers borrow shares they do not own and then sell themhoping to buy them back more cheaply if the price falls. Prices ofHBOS shares fell from 495.24p to 264.5p leaving the scope to make aprofit of 230.74p a share, or a total of £1.27bn.]
[Click here for full story at Businessweek.com]

Foresight + market manipulation = scope net income jumps (sometimesat the cost of peace of mind lost in the shadowland between goodand bad and right and wrong)
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Tom Group Ltd., the media company controlled by Hong Kongbillionaire Li Ka-shing and Joost, a rival to YouTube:
1. They will form a venture to offer television programs over theInternet in China to revive Web revenue that fell 21 percent lastyear after wireless carriers China Mobile Ltd. and China UnicomLtd. tightened restrictions on sales of ring tones and games totheir handset users.
2. They will share advertising revenue generated by the venture.
[Click here for full story at Bloomberg.com]

Joint venture = more resources = more scope for income (even if itis to be shared)
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GlaxoSmithKline Plc, Europe's largest drugmaker:
1. It will work with Aspen Pharmacare Holdings Ltd. to market theSouth African generic-drug maker's 1,200 products to expand inemerging markets such as Asia.
2. It will make smaller, "bolt- on" acquisitions indisease areas such as ophthalmology, oncology and neuroscience todecrease the company's dependence on small-molecule, chemical-baseddrugs.
3. It will give priority to BRIC markets - Brazil, Russia, India,and China
4. It will slow down its buy back program for 12 billion pounds ofshares to free up funds for expansion in developing markets.
5. It is trying to replace revenue with new products as medicinesthat reached 2.8 billion pounds in 2006 sales face challenges fromgeneric products this year
[Click here for story at Bloomberg.com]

Synergic partnerships + easy acquisitions + focus on emergingmarkets + delaying buybacks for expansion + seeking new products =more income
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Amazon.com Inc., the world's largest Internet retailer, which sellsproducts in more than three dozen categories ranging from powertools to musical instruments.
1. It added electronics and digital-book downloads. It expandeddigital sales, introducing the Kindle electronic-reading devicelast year to encourage book, magazine and newspaper downloads.
2. It opened an office-supplies Web store
3. It bought Fabric.com, which sells material and sewing tools.
4. It promoted free shipping to entice U.S. customers grapplingwith declining home values and record gasoline prices.
5. It promoted downloads of movies and music, where it ranks secondbehind Apple Inc.'s iTunes.
[Click here for full story at Bloomberg.com]

More products + more promotions and freebies = more income (but notwithout a cost that must be recovered)
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SK Telecom Co., South Korea's largest mobile-phone operator in amarket where about nine out of 10 people already own a handset:
1. It increased marketing spending 25 percent to keep customersfrom defecting to KT Freetel Co. and LG Telecom Ltd.
2. It has introduced plans that require users to sign up for theirservices for at least one year.
3. It is increasing promotions and handset subsidies to lurecontract subscribers.
4. It is seeking to expand in overseas markets including China andthe U.S. to counter slowing growth in Korea's mobile-phone market.
5. It acquired a 39 percent stake in Hanarotelecom Inc., SouthKorea's second-largest provider of high-speed Internet connections,for access to a quarter of that market.
6. It converted $1 billion of bonds in China Unicom Ltd. to a 6.6percent stake.
[Click here for story at Bloomberg.com]

Promotions + longer contracts + expansions and acquisitions inlarge markets and growing markets = more income
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Microsoft, software giant, trying to turn around its limping onlineoperations after failing to acquire Yahoo:
1. It will invest 5% to 10% of operating income on onlineoperations, which might increase to 20% to 40% if it is successful- and continue spending until it gets greater scale
2. It will provide Web search tools to users of Facebook, and placesearch-related ads on pages of the social network by the end of2008.
3. It paid $240 million for a 1.6% stake in Facebook, a swiftlygrowing Web site that boasts some 90 million registered users.
4. It will and split the online operations from those that handleMicrosoft's flagship operating system, Windows.
5. It will invest much of its new spending in research anddevelopment to further improve its Web search engine andadvertising technology, keeping pace with Google's annual spendingon research and development.
6. It will boost its marketing efforts to draw users to its Netofferings.
7. It will invest more in expensive infrastructure technology tooffer ever more services online.
8. It will soon launch a new advertising campaign aimed atconvincing consumers that Vista is a lot better than they mightthink.
9. It will spend at least $1.2 billion a year for the foreseeablefuture to compete with Google Inc. because the opportunity inonline advertising is too big to ignore.
10. It will buy Aliso Viejo, California- based DATAllegro Inc. toadd data-management technology to its software for servercomputers.
11. It will focus the additional money on boosting the onlinebusiness and increasing marketing of personal computers and phonesto consumers
12. It spent more on computer data centers and acquiredSeattle-based ad company AQuantive Inc.
13. It will put the Web unit in a better position with ads formobile handsets
[Click here for story at Businessweek.com]

[Click here for story at Bloomberg.com]

Can you seriously change the game by giving it unconvincingstatistical numbers like 5%, 10%, 20%, 40%, $1.2 billion⬦? Wouldyou not give more than everything you've got if you really wantedto change the game?
Or would you start a global competition for ideas specifically tobeat, or better, to sidetrack Google? Prize money pool - say $1.2billion every year?
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Hyundai Motor, South Korean carmaker, trying to convert this newera of high oil prices into an opportunity with its smallfuel-efficient cars:
1. It is once again promoting its small cars. So its plans forluxury models may slow.
2. It will introduce about a half-dozen new small models in theU.S., starting with a new Elantra wagon based on a compact calledthe i30 in Europe.
3. It is considering building them in the U.S. from next year. Itmay make small cars at a new plant in West Point, Ga., that itsaffiliate Kia Motors expects to open next year.
4. It wants to boost market share in India, China and Russia.
5. It has an aggressive plan to add new capacity. Last year itopened two new plants in Beijing and Chennai-each with annualcapacity of 300,000 small cars. It will build factories in theCzech Republic and Russia.
6. It will launch its first hybrid, a version of the Elantra nextyear.
7. It will launch a hybrid version of the Sonata in the U.S. in2010.
8. It will launch its first premium sedan, the Genesis, a $38,000V8 rear-wheel drive, in the U.S. this fall to compete with luxuryicons such as BMW and Mercedes
[Click here for full story at Businessweek.com]

Matching products to opportunities + expansion in emerging marketsand shifting markets + new products + new segment invasions = moreincome
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Bharat Heavy Electricals Ltd., India's biggest power-equipmentmaker:
1. It wants to generate 30 percent of its revenue from units otherthan power-equipment in four years from 25 percent now.
2. It is forming joint ventures to fill technology gaps.
3. It seeks contracts for rail engines and oil-rigs to doubleannual sales to $11 billion in four years
4. It is looking for a joint venture for 660 locomotives of 12,000horsepower each for eight years and maintenance for two decades (asof now it doesn't make locomotives with more than 7,000horsepower).
5. It may spend 2 billion rupees to bid for a German maker ofrail-coach prototypes
6. It will set up a 15 billion rupee venture for making lowpressure turbines and generator forgings and choose a partner forthis by September.
7. It also seeking a venture partner to expand the oil-rigbusiness.
[Click here for full story at Bloomberg.com]

Expanding in anti-core businesses may draw them gradually into thecore of enhanced competencies and therefore enhanced income
Seeking technology partners = wider, deeper mastermind = betterproduct = more income
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COST SAVING STRATEGIES
Barry Callebaut AG, the world's biggest contract manufacturer andsupplier of bulk chocolate, fighting a 40 percent jump in cocoaprices:
1. It uses its scale of operations to make products almost 20percent cheaper than smaller companies
2. It has trimmed consumer businesses over the last year. It hasreduced sales of its own brands of chocolate, including Sarotti andJacques, to 20 percent of revenue from a third in 2005. It sold theBrach's candy line to closely held Farley's & Sathers Candy Co.
3. It has frozen hiring and cut marketing to save 20 million Swissfrancs in 2008 and may be extended into next year.
[Click here for full story at Bloomberg.com]

Larger scale of operation = lower costs
Trimming less profitable businesses = lower costs
Cutting hiring and marketing costs = lower costs but sometimes witha negative impact on income
* * * * * * * * * *
Big Pharmaceutical Companies, facing fewer prescriptions filled,patent expirations, and FDA rejections of new drugs:
1. They are continuing to consoldate (Roche has bid $44 billion forGenentech, Teva Pharmaceutical Industries has bid $7 billion forrival Barr Pharmaceuticals).
2. They are slashing sales personnel
3. They are implementing efficiency plans
4. They are slashing dividend
[Click here for full story at Businessweek.com]

Aren't back office guys usually the first to go in downsizings?
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Wachovia, the fourth-largest U.S. bank by assets, with $8.9 billionin losses tied to mortgages:
1. It will leave the wholesale mortgage lending business.
2. It will cut 6,350 jobs
3. It cut its quarterly dividend to 5 cents per share from 37.5cents, which will conserve approximately $700 million of capitalper quarter.
[Click here for full story at Businessweek.com]

Leaving unprofitable businesses = cost savings
Job cuts = lower cost but sometimes with some adverse impact onincome
Lower dividend = lower cost of financing
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PSA Peugeot Citroen, Europe's second-biggest carmaker:
1. It has instituted a savings program to reduce overhead and fixedproduction costs by 30 percent by 2010
2. It cut 10,300 positions in western Europe last year, 80 percentof them in France
3. It will shorten vehicle development times
4. It improved quality to reduce guarantee costs
[Click here for full story at Bloomberg.com]

Determination to save costs + job cuts + time savings + improvedquality = Cost savings
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Lloyd's of London, the venerable specialty insurance market thatbrings together underwriters and brokers to insure everything, butwith claims processing stuck in the 17th century that needed to bedigitalized:
1. It sought out those members who were dissatisfied with thetraditional procedures as digital evangelists.
2. It worked out a system that would allow the electronicprocessing of claims.
3. It released plaudit lists of those who used the system well
4. It punished slackers with the requirement to invest more capitalto cover their underwriting risks.
5. It embarked on a high-profile CEO led campign among membercompanies.
[Claims processing time reduced by half]
[Click here for full story at Businessweek.com]

Time saved = cost saved (but of course at the cost of all the newelectronic infrastructure and its maintenance)
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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