Increase the Output Over Which a Fixed Cost ICD is Used

This action reduces the quantity of a unique fixed cost ICD used to produce a unit of Output by increasing the units of Output. For example, a new product design, or a new process patent, are both ICDs that have virtually limitless capacity for use. These are fixed cost ICDs. You pay for them once and you can use them over a virtually unlimited amount of Output. Their ICD/O ratios are limited only by the current demand level for Output.

A. Acquire similar organization to spread fixed cost ICDs

The acquisition of another organization with a similar business enables the company to take certain fixed cost ICDs in the form of processes and designs and use them over a larger amount of Output.

Buy company in complementary market: Supplier, in order to save purchases cost

No. Industry SIC Year Notes
1 1531 1996 Centex Corp. increased its stake in VistaProperties Inc. to 99.75% from 53% by merging the land developer with its homebuilding operations; this will allow both to operate more efficiently.
2 3571 2000 AOL’s purchase of Time Warner reasserted its ability to deliver broadband.
3 3674 2001 It originally acquired the Alpha chip business when it purchased Digital Equipment in 1998.
4 4832 1997 Jacor also recently purchased a satellite provider, which will enable the company to more efficiently distribute its programming and, separately, a traffic information company located in Southern California that provides reports to radio and television stations.
5 6211 1977 In 1977 DLJ, Inc. diversified into the securities clearing business though the acquisition of Pershing & Co.
6 7372 1994 Lotus began financing Iris who eventually produced Lotus’s notes, Lotus’s fastest growing new product. Lotus now to acquire Iris.
7 7372 1994 Computer Associates to acquire ASK. C.A. has done well buying struggling software companies and turning them around by sharply reducing expenses. ASK will need far fewer people in sales, administration and R&D when acquired.
8 7375 2001 If finalized, the deal would be Yahoo’s third-largest acquisition of a public company, trailing its purchases of Geocities and TMP Worldwide is the only bidder for the New York’s HotJobs.
9 8082 2001 Since late 2000, Option Care has bought five pharmacies. It most recently purchased an infusion pharmacy in St. Louis – a key managed care market. Option Care owns 28 of its pharmacies.

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