Brainstorming Ideas: Increase the Output Over Which a Fixed Cost ICD is Used

Increase the Output (O) 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.

A. 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.

1. Warnings and advice
2. Buy company in complementary market
3. BUY COMPANY IN SAME MARKET
   
   1. For segment (e.g. geographic) expansion at low cost
      1. New geography outside country Examples>>
      2. New geography inside country Examples>>
   2. For price point for product family addition to product line
      1. Buy higher price point Examples>>
      2. Buy lower price point Examples>>
   3. For cost reduction opportunity in larger business
      1. Leader buys another leader Examples>>
      2. Leader buys a follower Examples>>
      3. Follower buys a leader Examples>>
      4. Followers combine Examples>>

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