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 same market
|1||2711||2001||High margins are partly a bounty for helping trailblaze the practice of buying community papers in geographic bunches to lure ad dollars from metro dailies and trim expenses through staff consolidation.|
|2||3312||2004||With the purchase of International Steel Group in the U.S. Mittal Steel Co. hopes to follow its highly successful procedure and revitalize the U.S. industry. The company will integrate the eight U.S. mills which are mostly clustered around the Great Lakes. By running the facilities as a single unit, he seeks to extract better terms from suppliers of iron ore, coal and electricity. It will also offer clients a stable source of supply. The new company will have about 40% of the U.S. market for flat-rolled steel used in autos. However, cost cutting measures might be less effective than in developing markets as the companies have already gone through many cost cutting exercises.|
|3||4812||2004||Nextel began discussions with Sprint on a plan to build a new wireless network together which would have cost Nextel $3 billion on its own. The Project Planet is essentially Sprint buying Nextel, but the companies are calling it a merger of equals and ble|
|4||4911||1996||Wheelabrator completed in November its third acquisition of an "on site" co-generation facility this year. The purchase price was $30 million.|
|5||5411||2001||Ahold is acquiring the rest of Peapod Inc. for $35 mil right after the online grocery business endured a string of closures (most notably, Webvan).|
|6||6411||1997||Marsh & McLennan to acquire insurance-broker Johnson & Higgins. Analysts say the acquisition of one of Marsh's big rivals makes sense because it could close duplicative offices in many cities and trim overlapping support services. Acquisition by Marsh comes at a time when insurance brokerage firms are under pressure to sharply boost computer technologies, so additional savings would come from consolidating costly infrastructural improvements.|
|7||8062||1986||When NHI acquires small money losing hospitals, it reduces staff and fixes lax accounting, employment, and inventory control.|
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