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 cost reduction opportunity in larger business:
Follower buys a leader

No. Industry SIC Year Notes
1 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

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