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.

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:
Customer, in order to save selling costs

No. Industry SIC Year Notes
1 2273 1996 Within a 6 week period at the end of 1995 and early 1996, Shaw announced plans to buy the Maxim Group which owns or franchises 548 Carpet Max stores, and reported sales of about $110 million in the past fiscal year.
2 3711 1990 Last year Chrysler bought Thrifty Rent-a-Car System to guarantee a captive, high-volume fleet buyer for Chrysler cars.
3 4513 2004 After UPS bought Mail Boxes Etc. in 2001, FedEx decided that it needed a greater retail presence to attract customers. With 1,231 retail locations and $2 billion in sales, Kinko's was acquired by FedEx for $2.4 billion. Customers can ship their resumes from the same place they had them copied and a new service allows them to zap stuff from their own laptop to Kinko's, where it is printed, bound, and shipped in one easy transaction. FedEx is pouring more than $20 million into a re-branding campaign and it has sent Kinko's employees to more than 700,000 total hours of training on how to handle air and express shipping. FedEx Kinko's president wants to beef up the copying, document production, and other services for large companies, a market that Xerox and Pitney Bowes currently dominate.
4 5511 1999 Both GM and Ford have raised hackles among their independent dealers by launching new units to buy dealerships and operate them as factory-owned stores where they could more easily test Internet selling systems.
5 5945 2001 Following its acquisition of the eToys Website, software and warehouse last summer, KB conducted focus groups to see whether it should fold the old eToys into its own site. But the research showed that eToys was a lot more popular than KB.

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