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:
|1||3312||2004||Steel Dynamics minimill has bought or built three new mills and a number of other operations since 2001. The expansion took place during an industry cycle that drove 47 top competitors into bankruptcy protection. Additions included two acquired mills and the $315 million construction of a structural steel and rail operation. Steel Dynamics nevertheless managed to show a profit each year.|
|2||5734||1994||Babbage's & Software Etc. are merging. Combined company would have greater buying power when dealing with vendors, giving it more pricing flexibility to compete against mass marketers.|
|3||5812||1994||Triarc, parent of Arby's, to acquire Long John Silver's chain. Triarc says it also plans to convert hundreds of restaurants to "dual-branded" stores with 2 different menus, one offering Arby's and the other Long John Silver's seafood.|
|4||6311||1995||The Massachusetts Mutual Life Insurance Co. & Connecticut Mutual Life Insurance Co. said yesterday that they're discussing a merger. A deal would create one of nation's 10 largest life insurance companies & would substantially decrease costs for both companies.|
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