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.

B. 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.

Combine fixed cost ICDs with competitors into a separate business. Combine ICDs from the major cost functions of the company

No. Industry SIC Year Notes
1 3312 2004 Posco has invested $800 million in 14 Chinese joint ventures. By 2006 the company plans some $1.4 billion in fresh investment in China, especially in galvanized and stainless steel to supply global auto and appliance makers that have opened plants there.
2 3711 2002 By pooling their resources, GM, Ford, and Chrysler were more effective in shaping the clean-engine revolution and staying ahead of would-be insurgents than they would have been if each had tried to do so independently.
3 4213 1996 Regional LTL carriers positioned themselves to take on the nationals on multiple fronts. NE Motor Freight and AAA Cooper forged a partnership to provide two and three day transit between the northeast and southeast.
4 4911 2006 In an effort to compete against big players in the nuclear-power industry, General Electric and Hitachi agreed to combine their nuclear power business which uses boiling-water reactors. GE will have a 60% stake in the venture while Hitachi will have the rest. The move comes at a time of significant industry consolidation. Reactor makers need partners to share the costs and the risks associated with gaining regulatory approval.
5 5942 2000 Threatened by fierce online competitors Book of the Month Club and Literary Guild agreed to form an alliance arranged by the companies that control them: Time Warner Inc. and Bertelsmann AG. The deal involves no exchange of money or shares.
6 6512 1999 Simon Property Group and Time Warner plan to merge the experience of retail and etail through a network of kiosks, broadcasts, web sites, print media, and live entertainment.
7 7376 2005 Electronic Data Systems is partnering with Towers Perrin and spending $420 million on a venture to allow corporations to outsource their human-resources departments. EDS has failed to increase sales in recent times due to increasing competition from giants like IBM and low-cost rivals in India. Its financial problems have scared off potential clients.

<<Return to Increase the Output