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 price point for product family addition to product line:
Buy higher price point
|Unilever, the world's largest ice-cream-maker is paying $236 million to acquire Ben & Jerry's.
|World Carpets has used every acquisition as an opportunity to fill in price points in its product portfolio and eliminate redundant products. Within 6 months of its WundaWeave acquisition, World eliminated 65 products and repositioned the remaining 55.
|Hanna entered the specialty chemical industry by acquiring 5 firms – bought only chemical companies that commanded the top positions in their markets, so it enjoys economies of scale that its competitors cannot match.
|A.O. Smith purchased UPPCO, an $80 million manufacturer of C-frame subfractional electric motors for ventilation and specialty applications, for $60 million, or 75% of sales.
|Through a combination of smart strategy, savvy acquisitions, and a really good execution FedEx has been able to stay on top in the industry. Six years ago the company began getting involved with the truckload freight hauling business. Founder and CEO of the company built the freight hauling division of the company by buying two regional freight haulers. Revenues for the LTL business known as FedEx freight grew 27% in the past quarter compared to a year ago.
|If Nextel had not merged with Sprint, the cost of upgrading its own network would be at least $2 billion because its current technology can't handle advanced services like high-speed data. The company's technology has helped it become the fastest growing national wireless company. Its customer roster grew 22% in 2003 compared with 13% for the industry as a whole.
|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).
|In January, VoiceStream, the U.S. venture of Deutsche Telecom, bought MobileStar, a defunct provider of 802 nodes in hundreds of Starbucks shops.
|Over the last year,Concentra has completed acquisitions that have added a PPO network to its offering.
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