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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.

The Real Reason Superstar Firms Are Pulling Ahead

Harvard Business Review

Are they out-competing their rivals, or are they using their size and influence to avoid competition altogether? If it’s expensive to adopt and get good at IT, it’s more economical for big companies like Wal-Mart that can spread those costs out over lots and lots of products sold.

Why Mergers Like the At&T-Time Warner Deal Should Go Through

Harvard Business Review

And though there have long been half-hearted efforts to reduce the influence of the Chicago School, most lack any analytic rigor, amounting to little more than calls to return to the early days of antitrust, when big was decidedly bad. Video programming, after all, is produced at high fixed costs, with increasingly small marginal costs to duplicate and distribute widely. Britta Knappmann/EyeEm/Getty Images.

How Companies Can Use Investors to Their Advantage

Harvard Business Review

For its part, Nikon focused on cost optimization opportunities and balance sheet management when communicating to value-oriented investors and on long-term structural changes when communicating to growth-oriented investors. Directly influenced by investor input, Nikon developed a restructuring plan that would carry a onetime cost of ¥48 billion ($460 million) but generate ¥20 billion ($190 million) in annual savings. Heini Wehrle/BIA/Minden Pictures/Getty Images.

The U.S. Media’s Problems Are Much Bigger than Fake News and Filter Bubbles

Harvard Business Review

The second is influencing how your message gets amplified. 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. But digital technology and business incentives exerted more influence over the media coverage than editorial decisions and missing voices did.

How Drucker Thought About Complexity

Harvard Business Review

I have long been influenced by Drucker''s work. 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.

Who Rules the Web Now?

Harvard Business Review

They have massive amounts of currency (cash and stock); huge storehouses of customer information; and cloud computing resources that make them low-cost providers in any digital endeavor. As each of these companies expands its fixed-cost infrastructure, profits grow geometrically because the additional variable cost of adding each new user is near zero. Adding a profile on Facebook has little to no impact on Facebook's operating costs.

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