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.
Use fixed cost ICDs with more customers
By using fixed cost ICDs with more customer volume, the unit cost of the ICD declines as a component of the final Output cost.
Use fixed cost ICDs with competitors who employ outsourcing. Sell ICDs in major cost functions of the company.
|Weatherford drilling services firm is one driven by emerging technologies. For example, its technology for expandable-pipes that allow wells to be wider at greater depths-is improving. Weatherford recently created a deal to market the devices with larger rival Schlumberger.
|In order to hold off Barr on Prozac, Lilly pursued a number of "franchise extension strategies". It forms a joint venture with a company developing a pill that would have fewer side effects, but still use the Prozac ingredients.
|Mitsubishi Motors has sold its headquarters building in Tokyo to raise cash and has plans to reduce staff by 30%, largely through attrition. Mitsubishi also plans to shutter a factory in central Japan. To boost sales, it recently agreed to boost the number of mini-vehicles it produces for sale under Nissan's brand to 59,000 from 20,000. It is also negotiating with SGA Peugeot Citroen about a similar agreement.
|Sprint PCS is the nation's #4 wireless phone company and it employs a rent-a-network strategy. This strategy has allowed the company leeway so that it doesn't have to rush into any merger. Sprint Corp. is looking for more partners to buy capacity on the PCS wireless network. These companies than resell the services back to user and PCS gets more money. Sprint is the only one to do this in the major U.S. wireless carriers.
|Beer distributors have begun distributing nonalcoholic drinks to compensate for rising costs amidst flat beer sales. Anheuser-Busch allows its distributors to distribute its energy drinks. However, it offers incentives to those companies that only carry brands it owns or has an affiliation with.
|AutoNation Inc., the big Fort Lauderdale, Fla., dealership consolidator, this month is putting online all the inventory from its 270 dealerships and is recruiting independent dealerships to sell on its Web site.
|Triple-A credit rating is declining in popularity. If you are running a company, you have to balance the interests of lenders and shareholders. Thirty years ago, the balance was tipped in favor of lenders. At that time, corporate borrowers depended heavily on banks, and banks tended to keep the loans they made. Lenders are also willing to tolerate more risk, in part because of financial innovations that allow them to spread and hedge risks. For example, many banks now package the loans they make and sell them to institutions.
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