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 inside country

No. Industry SIC Year Notes
1 1521 1994 Horton, the homebuilder, recently acquired Joe Miller Homes of Minnesota; cheaper than buying raw acreage and developing its own local organization. "Buying a good builder gives you a 3-yr jump over starting from scratch."
2 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.
3 3271 2004 Florida Rock has gotten further boosts from last year's $122 million acquisition of two cement import terminals from Lafarge North America. There is a finite amount of rock, and for environmental and other reasons, it is enormously difficult to really create a terminal for processing cement. The property they bought from Lafarge is irreplaceable.
4 3669 1991 Alert Holdings bought many little monitoring companies. To buy other companies, Alert created limited partnerships.
5 4011 1996 Union Pacific has proposed a takeover of Southern Pacific.
6 4812 2001 Alltel has offered to buy CenturyTel for $5.9 billion. If the deal goes through, it would create a rural phone empire with a 2001 revenue of $10 billion and an operating cash flow of $3.9 billion. It would have 12 million customers across the country.
7 4813 1996 Davel bought ComTel Corp's long distance service, gaining an inroad into the hospitality industry in 43 states.
8 4832 1997 Jacor's recent expansion into the smaller-ranked markets is consistent with its satellite market strategy of leveraging existing resources from its major markets into nearby territories at little incremental cost.
9 4841 1997 By assembling broad continuous groups of subscribers, cable operators can deliver new services at a lower cost because of marketing and operating efficiencies (ex: Cablevision Systems is buying TCI Systems serving subscribers in markets that mesh perfectly with the company's cable systems in the N.Y. area.)
10 4924 1996 Xplor focuses on developing newly acquired oil properties in S IL, additional acquisitions near core properties in IL & WV.
11 4953 1996 United Waste has made 98 acquisitions since 1989. It makes as many acquisitions in one fragmented market as possible. Then it consolidates those operations and cuts out duplicate expenses.
12 5044 1997 IKON recently purchased 6 suppliers of office equipment in Georgia, giving it a total of 35 locations in the state. In the 4th quarter of 1996 alone, IKON bought 29 smaller dealers nationwide. For the year, it purchased 100 companies.
13 6022 2001 First Fed Bank of CA does buy individual locations from other banks but it does not plan to have a big merger.
14 6036 2003 Washington Mutual is highly successful in its acquisitions. It doesn't overpay and it quickly integrates technology. It picks acquisition targets that will make them a market leader and opens branches in dense urban areas that have high customer-dissatisfaction.
15 8011 1997 Primary drivers of growth for this segment are acquisitions of additional ophthalmology practices in existing and new markets

<<Return to Increase the Output