Increase the Output Over Which a Fixed Cost ICDs 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.
Combine fixed cost ICDs with competitors into a separate business. Combine ICDs from the major cost functions of the company.
Combine Service ICDs
|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.
|Shearson Lehman Brothers and Prudential-Bache are in preliminary talks to combine their operations that process securities trades.
|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.
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