First Friday Book Synopsis

NOVEMBER 25, 2013

Bob''s blog entries De Beers Ford Motor Company Harvard Business Review Press How and why downstream [comma] customer-led activities and preferences will dominate the competitive landscape in the future Infosys Niraj Dawar the locus of activities that add value (those the customer is willing to pay for) the locus of competitive advantage the primary fixed costs in the business Tilt: Shifting Your Strategy from Products to Customers Toyota Motor Company Walmart

Fixed Costs 2

Fixed Costs Review Competitive Advantage Books 2

Women on Business

FEBRUARY 1, 2011

Corporate budgeting used to be simple: review fixed costs once a year, control variable expenses as much as possible, calculate the ROI on capital expenditures and relax until the end of the fiscal year. The goal was clear and easily quantified (though not so easily achieved): maximize profit. Smart organizations are adding three elements to

ROI 17

ROI Fixed Costs Budgeting Cost 17

Harvard Business Review

OCTOBER 13, 2017

Many leaders look at profit margin, which measures the total amount by which revenue from sales exceeds costs. Knight warns that it’s “a term that can be interpreted and used in many ways,” but the standard definition is this: When you make a product or deliver a service and deduct the variable cost of delivering that product, the leftover revenue is the contribution margin. You might think of this as the portion of sales that helps to offset fixed costs.

Fixed Costs 4

Fixed Costs Cost Productivity Products 4

Harvard Business Review

JULY 2, 2014

It’s a simple calculation to determine how many units must be sold at a given price to cover one’s fixed costs. Assume she must incur a fixed cost of $25,500 to produce and sell a kite. These costs might cover the software needed to design the kite and be sure it is sufficiently aerodynamic, the fee paid to a graphic designer to design the look and feel of the kite, and the development of promotional materials used to advertise the kite.

Fixed Costs 6

Fixed Costs Marketing Cost Price 6

Harvard Business Review

JULY 2, 2014

It’s a simple calculation to determine how many units must be sold at a given price to cover one’s fixed costs. Assume she must incur a fixed cost of $25,500 to produce and sell a kite. These costs might cover the software needed to design the kite and be sure it is sufficiently aerodynamic, the fee paid to a graphic designer to design the look and feel of the kite, and the development of promotional materials used to advertise the kite.

Fixed Costs 6

Fixed Costs Marketing Cost Price 6

Harvard Business Review

JUNE 22, 2015

Marketers often have to make the call on whether a certain marketing investment is worth the cost. “Breakeven quantity is the number of incremental units that the firm needs to sell to cover the cost of a marketing program or other type of investment,” says Avery.

Marketing 5

Marketing Payback Period Price Fixed Costs 5

Harvard Business Review

NOVEMBER 12, 2012

By making the fixed cost of payroll inherently more variable under differing business conditions, you can make your company more resilient and agile, while also treating your employees exceptionally well. In a recent blog post , we cited some alarming numbers: 40% of workers are planning to look for a new job within the next six months, and 69% say they're already passively looking. As employers, those figures are frightening.

Long-term 9

Long-term Fixed Costs Management Agility 9

CO2

JANUARY 2, 2011

It is useful to distinction between three motivations for creating partnerships: Optimization and economy of scale, Reduction of risk and uncertainty, Acquisition of particular resources and activities) Cost Structure – The business model elements result in the cost structure. (It It is useful to to distinguish between two broad classes of business models Cost Structures: cost cost-driven and value-driven from the following categories Cost-driven, Value-driven.

Business Model 22

Business Model Executive Coaching Wiersema Blue Ocean Strategy 22

Harvard Business Review

MAY 13, 2016

Imagine eliminating all of the redundancies in fixed costs. The nonprofit sector has limbs.

NGO 10

NGO Budgeting Diversity Fixed Costs 10

Harvard Business Review

DECEMBER 17, 2014

Eden McCallum, thus, manages to keep its overhead and other fixed costs at a minimum. Do you work for a firm where managers think employees really have to work (what is called) “full time”? That forty hours per week (or whatever is considered “full time” in your profession) is really a necessity? Perhaps you are one of those people with that conviction yourself — that in your job it is really not possible to work “part time.”

McCallum 9

McCallum Competitive Advantage McKinsey Consultative 9

Harvard Business Review

JUNE 25, 2013

Almost 80 years ago, Ronald Coase won the Nobel Prize in Economics for an essay that suggested that we do this for the sake of scalable efficiency — it costs less to coordinate activity within a firm than across independent entities.

Drucker 10

Drucker Decentralization Management Outsourcing 10

Harvard Business Review

OCTOBER 6, 2014

The “ accelerated recognition of commercial income and delayed accrual of costs” undoubtedly flatters short-term results, but it soon catches up with you, as four suspended senior executives have found out. Troubles at Tesco, the UK’s leading retailer, are mounting.

Merchandising 11

Merchandising Discount Price Trends 11

Harvard Business Review

JULY 27, 2017

Third, corporate VCs and accelerators are costly and complex to operate, turning them into a slow and expensive innovation tool. And the fixed cost from “touchpoint-to-pilot” are immense. For example, in the case of a $100 million CVC fund, which can close five to 10 investments a year, these costs typically range from $1 to $2 million per startup — not including the administrative and variable costs of the pilot itself.

Innovation 4

Innovation Venture Capitalist Article Meyer 4

Harvard Business Review

JANUARY 5, 2017

The media’s bias toward big events stems from three features of its economics: Fixed costs. The cost of covering a golf tournament doesn’t depend on whether Tiger Woods plays. Fixed costs have always been central to the economics of media. A combination of fixed costs, an advertising-reliant model, and spillovers produced a staggering difference in earned media coverage during the primaries: $2 billion for Trump and $300 million for Sanders.

Article 4

Article Advertising Franchising Fixed Costs 4

Harvard Business Review

MAY 19, 2015

That gave it a steadier cash flow to cover the costs of its large fixed cost investments, but did not eliminate the unused capacity of plants dedicated to one kind of product. Conglomerates, at least in the United States, have a checkered history.

Strategy 6

Strategy Outsourcing Learning Curve Engineering 6

Harvard Business Review

MAY 9, 2013

In every part of the industry, the open innovation model is changing the economics of advertising by switching significant fixed costs to variable costs and sourcing creative from more relevant and, many times, lower cost sources. They''ll also need these networks in order to compete on cost: The open innovation model can shave time and expense off the old ad development cycle. Much like newspapers, conventional advertising agencies are becoming irrelevant.

Marketing 7

Marketing Wireless Brand Creativity 7

Harvard Business Review

MAY 21, 2015

The costly and complex operations of transporting energy have made utilities natural monopolies, while regulatory barriers and the high fixed costs of building and maintaining regional electrical grid infrastructure have also kept much competition at bay.

Transportation 5

Transportation Software Real Estate Price 5

Harvard Business Review

MARCH 22, 2013

However, the model separates subscriber revenue from the cost of the network. Congestion, rather than raw usage, is the key driver of this phenomenon; given that the Internet Service Provider network is largely a fixed-cost asset.

Fixed Costs 6

Fixed Costs Decentralization Efficiency GDP 6

Harvard Business Review

MARCH 22, 2013

However, the model separates subscriber revenue from the cost of the network. Congestion, rather than raw usage, is the key driver of this phenomenon; given that the Internet Service Provider network is largely a fixed-cost asset.

Fixed Costs 6

Fixed Costs Decentralization Efficiency GDP 6

Harvard Business Review

OCTOBER 27, 2016

A full-time job provided the steady income needed to support our traditional version of the American Dream: the highly leveraged, high-fixed-cost house; the cars; the latest consumer goods. The winners and losers in the U.S. economy have traditionally been easy to identify. If you had a full-time job, you won.

Article 4

Article Disaggregation Insurance Outsourcing 4

Harvard Business Review

AUGUST 12, 2015

Placing ads next to content helps websites recover the sizeable fixed costs of creating content. But ad blockers cut off this revenue stream and make it difficult to offset even the running cost of storing and delivering content to visitors.

Advertising 4

Advertising Article Content Fixed Costs 4

Harvard Business Review

JUNE 4, 2015

Since theme parks are high fixed cost/low variable cost entities, revenue from discount-enticed new customers is virtually all profit… free money. The Walt Disney Company is reportedly considering implementing surge pricing at its various theme parks.

Discount 4

Discount Fixed Costs Hotels Industry 4

Harvard Business Review

MARCH 16, 2017

remains home to a considerable number of “climate skeptics,” who clearly impact the politics around the issue, as they are unlikely to support costly actions such as carbon taxes intended to mitigate the challenge of climate change. A drug company must incur a large fixed cost to do the basic research, so it has strong incentives to predict what the demand for the drug will be if its research succeeds.

Aggregate Demand 2

Aggregate Demand Article Incentives Development 2

Harvard Business Review

MARCH 18, 2013

We didn't want to burden the organization with fixed costs. Almost everything had to be free, and the few things we paid for had to be scalable so that the unit costs would eventually approach zero.

Software 6

Software Fixed Costs Entrepreneur Film 6

Harvard Business Review

SEPTEMBER 18, 2013

These businesses have powerful disruptive potential because they can provide consulting at a fraction of the cost of traditional models, largely because they do not need to carry expensive fixed costs like recruiting, training, consultant “beach” time, and expensive real estate. HourlyNerd, by encouraging students to bid against each other, likely drives down the hourly cost of projects even more.

McCallum 5

McCallum Real Estate Fixed Costs McKinsey 5

Harvard Business Review

FEBRUARY 11, 2016

This arrangement is often complicated by inconsistent decision criteria: purchasing wants the lowest price and a fixed cost, whereas the business or operation wants the best resource, a good cultural fit, and enough flexibility in the contract to allow for changes in scope or strategy.

Talent Management 6

Talent Management Article Resources Pharmaceuticals 6

Harvard Business Review

DECEMBER 21, 2011

Within the first year of our effort net sales increased 27 percent while fixed costs were reduced by 40 percent. Not all fixed cost reductions were people. In light of today's economic volatility and uncertainty every aspect of business is being re-examined for its value in creating and sustaining profitable growth. I've worked in human resources for over 25 years, the past six with Newell Rubbermaid, and this is not a new endeavor for me.

Offshoring 3

Offshoring Outsourcing Fixed Costs Construction 3

Harvard Business Review

DECEMBER 25, 2013

Further, sales variation can get widened much more when it comes to financial variation because of fixed costs. There is a lot of hype and buzz around business intelligence. Companies are investing millions of dollars in business intelligence technology. However, unless this is accompanied by the simultaneous creation of a strong foundation for taking intelligent business actions, they are unlikely to reap a good return on that investment.

Uncertainty 6

Uncertainty Fixed Costs Course Planning 6

Harvard Business Review

APRIL 5, 2017

However, firms can efficiently increase margin growth without much revenue growth by managing to squeeze out their fixed costs to service the same level of output. Repaying such profits to shareholders through share repurchases is better than misinvesting that cash to diversify into unrelated businesses in which management has no expertise or overinvesting in projects that may not return cost of capital.

EPS 3

EPS Depreciation EBITDA McKinsey 3

Harvard Business Review

NOVEMBER 10, 2016

Exploring cutting edge ways to lower costs and improve quality. In healthcare, the need for administrative automation is viscerally felt – and the potential for alleviating burden and draining cost from the system is significant. On any given day in America, 40% of hospital beds lie empty, their enormous fixed costs weighing heavily on the system. is at a critical juncture, with an urgent need to bend the cost curve – slowing the rate of cost increases.

Technology 4

Technology Article Hotels Transportation 4

Harvard Business Review

OCTOBER 13, 2015

All will claim to reduce costs and improve quality. But, as Michael Porter and Robert Kaplan of Harvard Business School have argued , we need to examine costs at a more granular level at which clinical outcomes are matched with the business and administrative processes.

Article 6

Article Insurance Cost Porter 6

Harvard Business Review

APRIL 6, 2016

For instance, the cost of building and equipping a leading-edge semiconductor fab has climbed to $7 billion, as the technology required to make more advanced chips is getting more complex. Another risk is the opportunity cost of not benefiting from lower investment costs.

Co-Opetition 5

Co-Opetition Article Management Cost 5

Harvard Business Review

MARCH 28, 2014

The theory of disruption explains why incumbent businesses – with high fixed cost infrastructures and embedded beliefs about what the market wants – fail to adopt business models that lower the cost of their services and drive product accessibility to entirely new sets of users. “Over the next 10 years, virtual reality will become ubiquitous, affordable, and transformative.”.

Technology 4

Technology Automotive Industry Software 4

Harvard Business Review

SEPTEMBER 9, 2015

Consequently, although companies should cut costs now, they should be on the lookout for the quick rebound that is likely to follow. During an economic crisis, the exaggerated decline in orders can be especially damaging to upstream suppliers that have high fixed costs tied to production assets.

Article 4

Article Crisis Retail Restructuring 4

Harvard Business Review

MARCH 21, 2013

for an energy bar at the airport, which would have cost about $2.00 My willingness to pay the higher price reflects both the convenience to me of getting the bar at the last minute, as well as the fact that the retailer's costs at the airport are likely higher. But since books have low marginal cost (printing and distribution) relative to fixed costs (research, writing, and editing), Wiley can profitably sell its textbooks there at lower prices. The U.S.

Information 4

Information Media Technology Price 4

Harvard Business Review

MARCH 21, 2013

for an energy bar at the airport, which would have cost about $2.00 My willingness to pay the higher price reflects both the convenience to me of getting the bar at the last minute, as well as the fact that the retailer's costs at the airport are likely higher. But since books have low marginal cost (printing and distribution) relative to fixed costs (research, writing, and editing), Wiley can profitably sell its textbooks there at lower prices. The U.S.

Information 4

Information Media Technology Price 4

Harvard Business Review

AUGUST 16, 2011

ACSOI essentially measures Groupon's profits before subtracting its subscriber-acquisition costs and stock option-based compensation. Secondly, expecting a business to be profitable quickly forces it to keep its fixed costs low. Because a business's cost structure determines which customers it finds profitable, keeping these fixed costs low preserves strategic options for the company when it is choosing which customers to target. "Alright, you caught us.

Metrics 2

Metrics Christensen IPO Fixed Costs 2

Harvard Business Review

FEBRUARY 24, 2015

In parallel, it reduced its fixed costs by restructuring its industrial footprint and overhead structure; increasing sales, marketing, and R&D expenditures in targeted areas; and dramatically reducing working capital.

Chemicals 4

Chemicals Kahneman IPO Restructuring 4

Harvard Business Review

JUNE 24, 2013

If you are inside a big company, profit-draining ventures are typically early sacrifices in corporate cost-cutting exercises. How will you generate enough transactions to cover the fixed costs involved in running your business?

Venture Capitalist 4

Venture Capitalist Supply Chain Christensen Fixed Costs 4

Harvard Business Review

AUGUST 8, 2014

So to cover his monthly fixed costs of student loan payments (on more than $100k in debt), rent, and health care he was driving for Uber. I couldn’t agree more; they’re absolutely necessary to fix what ails us. Every once in a while you have one of those “microcosm experiences” that perfectly encapsulates the trends shaping our world. My most recent one came last week during an Uber ride.

Fixed Costs 3

Fixed Costs Policies Trends Health Care 3