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 same market: For segment (e.g. geographic) expansion at low cost:
New geography outside country
|1||2032||1996||Campbell's to purchase a top German soup company.|
|2||3290||1997||Owens Corning bought small, and only what would be profitable within a year. The biggest deal, also in 1994, was the insulation business of Pilkington.|
|3||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.|
|4||3537||1997||CASC is aggressively pursuing market share in Europe, using the cost advantage offered by its recently consolidated manufacturing facilities.|
|5||3663||2004||TCL is China's most ambitious consumer electronics maker. It employs more than 40,000 workers in factories in China, Vietnam, the Philippines, and Germany, making televisions, mobile phones, notebook PCs, refrigerators, and air conditioners. The company recently struck a $560 million deal to merge its television manufacturing facilities with those of French consumer electronics giant Thomson. TCL is set apart from its competitors by its strategy. TCL's alliance with Thomson is designed to help TCL keep sales and growth high. The merged company will be able to shift production easily to less expensive facilities in China and to realize greater economies of scale.|
|6||7261||1996||Loewen has aggressively expanded its holdings of funeral homes and cemeteries in the U.S. and Canada by acquiring stand-alone businesses.|
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