Business Intelligence

Variabilization

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Executive Summary

Fixed costs have merit. They turn growth into scale effects and cost advantage - and ultimately into profit. The 19705 was the golden age of fixed costs, as companies rode the experience curve to market leadership and superior profitability: "Cut price; costs will follow" was the management mantra. Such a strategy can still work when technology is stable, factor costs comparable, and market segments large and homogeneous. Unfortunately, those market characteristics are no longer widespread. Today, in many sectors, a company can lead in market share and volume and still lag behind rivals in profitably.

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