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. What if we want to make an investment and increase the fixed costs?

Variable Costs 18

Variable Costs Fixed Costs Sales Sales 18

Harvard Business Review

OCTOBER 13, 2017

Think about how company income statements usually work: You start with revenue, subtract cost of goods sold (COGS) to get gross profit , subtract operating expenses to get operating profit , and then subtract taxes, interest, and everything else to get net profit. In fact, COGS includes both variable and fixed costs.

Variable Costs 15

Variable Costs Fixed Costs Revenue Sales 15

UVA Darden

MAY 11, 2022

Once you add fixed costs to those wages, it gets very expensive to run a quality program with skilled providers. Fraga: For generations, we have operated from a scarcity perspective when it comes to early childhood. Child care is expensive to provide because it’s a highly regulated labor-driven service.

Education 52

Education ROI Government Fixed Costs 52

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. What if we want to make an investment and increase the fixed costs?

Variable Costs 10

Variable Costs Fixed Costs Sales Sales 10

Harvard Business Review

NOVEMBER 15, 2018

hospitals and health systems experienced an average 39% reduction in their operating margins from 2015 to 2017. This was because their expenses grew faster than their revenues, despite cost-cutting initiatives. Here are some examples of what will be required to change the operating culture: Contract rationalization. As the U.S.

Hospitality 14

Hospitality Manager Nonprofit Staffing 14

Harvard Business Review

MARCH 22, 2013

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. Like any fixed-cost asset, such as the Interstate highway system in the U.S., it is cheap to operate and expensive to upgrade.

Fixed Costs 17

Fixed Costs Revenue Assets Scaling 17

Harvard Business Review

SEPTEMBER 9, 2015

The essence of the phenomenon is the fact that each stage in the supply chain plans its capital projects and operations, including inventory levels, based on its future expectations. Macroeconomic data during the 2008 financial crisis show the bullwhip effect operating on a much broader scale. For example , U.S.

Sales 15

Sales Sales Operations Fixed Costs 15

Harvard Business Review

FEBRUARY 6, 2018

For existing health care companies, the operative words in that mandate have been “health care”; for Amazon, the operative words likely are “service that needs to be delivered to a customer.” The absence of fixed costs for customers attracted small and innovative web developers.

Hospitality 15

Hospitality Operations Insurance Fixed Costs 15

Harvard Business Review

MAY 19, 2015

Wall Street began charging a “conglomerate discount,” saying that diverse operations were hard to analyze with confidence. True synergies across the diverse operations were often hard to see. Before, a big conglomerate like GE diversified its risks by mixing pro-cyclical and counter-cyclical businesses.

Cash Flow 15

Cash Flow Engineering Fixed Costs Sales 15

Harvard Business Review

APRIL 6, 2016

Driven by economies of scale, container ship size has been increasing for decades, with the largest ships now costing roughly $200 million. The latest nuclear reactor designs, promising higher safety, longer operating life, and lower operating costs, cost up to $25 billion after factoring in the huge budget overruns.

Assets 12

Assets Operations Insurance Telecommunications 12

Harvard Business Review

MAY 8, 2012

Bharti's innovative business model converted fixed costs in capital expenditure to a variable cost based on usage of capacity. Through the outsourcing arrangements, Bharti dramatically lowered its costs while ensuring high quality for customers, since vendors had world-class competencies in their domains.

Balance Sheet 13

Balance Sheet Variable Costs Telecommunications Fixed Costs 13

Harvard Business Review

OCTOBER 6, 2014

If round after round of profit warnings was not enough – group operating profits fell 20% between 2011 and 2013 and are likely to fall another 30% in 2014 — the company recently announced it had overstated its first-half profit by about $400 million. billion in 2013, and operating profits increased 65% to $422 million. billion to $8.6

Reorganization 15

Reorganization Fixed Costs Transportation Sales 15

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.

Real Estate 12

Real Estate Small Business Fixed Costs Recruitment 12

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. Advertising Innovation Marketing'

Advertising 14

Advertising Variable Costs Media Fixed Costs 14

Harvard Business Review

APRIL 5, 2017

While a laudable effort in principle, measuring a company’s tendency to make myopic operating and investing decisions is fiendishly complex. But the other indicators probably pick up legitimate differences in how companies in the sample operate, as opposed to whether they are myopic.

Metrics 11

Metrics Cash Flow Revenue Compensation 11

Harvard Business Review

JUNE 25, 2013

The need to decentralize organizations around employees — viewing them as assets capable of expanding growth rather than as fixed costs to be eliminated — and to move away from standardized and tightly-specified process flows.

Fixed Costs 13

Fixed Costs Assets Scaling Education 13

Harvard Business Review

FEBRUARY 11, 2016

Too often, purchasing departments manage the selection while operating managers—not involved in selection by fiat—are expected to make the relationship work.

Administration 14

Administration Fixed Costs Benefits Manager 14

Harvard Business Review

SEPTEMBER 4, 2013

For example, a decade ago, it''s unlikely that small-business owners would have told you that they needed a flexible way to host data and applications, one that preferably turned the fixed cost of computer hardware into a variable cost of renting capacity. When the company rides an enabling trend.

Fixed Costs 8

Fixed Costs Variable Costs Assets Banking 8

Harvard Business Review

AUGUST 31, 2018

By cutting the fixed costs of computing — avoiding the need to hire IT staff, servers, and hardware — even the smallest firm can satisfy large and unexpected computing needs. This operational agility can be particularly valuable when facing uncertain demand or a fast-evolving competitive environment.

Scaling 14

Scaling Fixed Costs Software Education 14

Harvard Business Review

MARCH 22, 2013

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. Like any fixed-cost asset, such as the Interstate highway system in the U.S., it is cheap to operate and expensive to upgrade.

Fixed Costs 10

Fixed Costs Revenue Assets Scaling 10

Harvard Business Review

FEBRUARY 24, 2015

The first category is exogenous factors over which the business has little control: the growth of the markets into which it sells; the competitive intensity and thus the average profitability of the industry in which it operates; or the fragmentation of its industry and thus the scope for a growth-by-acquisition approach.

Assets 11

Assets Revenue Energy Fixed Costs 11

Harvard Business Review

NOVEMBER 18, 2013

Historically, larger scale has offered hospital systems a number of advantages, including increased referral volumes, better access to capital, stronger pricing power, and classic cost economies. For instance, larger scale has enabled many hospital systems to lower their per-patient operating costs significantly.

Hospitality 9

Hospitality Scaling Revenue Fixed Costs 9

Harvard Business Review

MARCH 28, 2014

Unfortunately, Zuckerberg’s “platform” reference has elicited many comparisons of Oculus to Google’s purchase of Android , the company that would provide Google with its own smartphone operating system. While Virtual Reality may one day be pervasive, the disruption of VR is nothing like disruption of mobility.

Fixed Costs 9

Fixed Costs Software Transportation Scaling 9

Harvard Business Review

NOVEMBER 29, 2013

A fascinating business dynamic will unfold as health care providers in the United States shift from a reimbursement system that has historically paid for procedures performed to one that rewards population health — providing the total care of a community at a fixed cost and improving its members overall health.

Revenue 9

Revenue Nonprofit Operations Hospitality 9

Harvard Business Review

DECEMBER 1, 2017

So not only were the current fees too weak to support his fixed costs, but future clients were turned off by his apparently excessive tastes. To address those cost overruns, Colin subleased some space, cancelled a redundant and very expensive trading service, and let one person go.

Revenue 10

Revenue Fixed Costs Staffing Accounts 10

Harvard Business Review

DECEMBER 25, 2013

Just like the pilot makes a calm assessment and operates the right levers, leaders need to create a climate and culture where people can make a calm assessment and fine-tune the right set of drivers. Further, sales variation can get widened much more when it comes to financial variation because of fixed costs.

Fixed Costs 9

Fixed Costs Sales Sales Revenue 9

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. In essence, the venture client, instead of equity, buys the technology of a startup when it is still a venture to do so.

Fixed Costs 8

Fixed Costs Variable Costs Administration Media 8

Harvard Business Review

NOVEMBER 6, 2013

Working under a fixed-cost ceiling was, of course, difficult. The constraints we operated within also required creativity, the formation of new partnerships, and an open-minded, outward-facing search for the best, most innovative models of care.

Hospitality 8

Hospitality Insurance Fixed Costs Accounts 8

Zenefits

JULY 31, 2022

Managing inflating costs can be difficult for companies, particularly with high fixed costs like infrastructure or manufacturing. Survival in an inflating economy requires businesses to find ways to keep costs down while still meeting customer demands. Any of the above. Back to Vote.

Manager 52

Manager Onboarding Banking Process Improvement 52

AIHR

APRIL 20, 2023

Similarly, L&D professionals have also struggled to provide an informed perspective of the risks associated with not developing individuals, and specifically how this will impact the ability of business to operate. The majority of budget resides in fixed costs related to headcount.

Sales 98

Sales Sales Fixed Costs Marketing 98

Chief Executive

JULY 25, 2022

If I could pick the one thing that I would change in how executives lead companies by magically waving a wand, it would be the timeframe in which they operate—that you manage for the quarter century, not the quarter. And if we do that, we can’t help but grow revenues per fixed cost. How do you get clear on what your flywheel is?

Balance Sheet 98

Balance Sheet Assets Engineering Operations 98

Harvard Business Review

AUGUST 16, 2011

This is the essence of Groupon's declaration last week that it will remove the controversial accounting metric called Adjusted Consolidated Segment Operating Income (ACSOI) from its financial statements. ACSOI essentially measures Groupon's profits before subtracting its subscriber-acquisition costs and stock option-based compensation.

Fixed Costs 22

Fixed Costs Metrics Scaling Marketing 22

Harvard Business Review

NOVEMBER 30, 2018

Capital-intensive factories have a high-fixed-cost, low-variable-cost operating model. If you greatly reduce the production volume, the cars that do come out have to absorb more of the fixed costs, and that eventually sends the product into a profitability death spiral. That is what GM is trying to do.

Fixed Costs 14

Fixed Costs Assets Cash Flow Variable Costs 14

Harvard Business Review

FEBRUARY 22, 2011

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. Greater scale bestows greater competitive advantage.

Advertising 16

Advertising Variable Costs Scaling Media 16

Harvard Business Review

MAY 13, 2016

It doesn’t have one center of organization and imagination looking out at the far horizon to inspire and guide all of the component parts to get to a place together that none operating independently could ever get to on its own. Imagine eliminating all of the redundancies in fixed costs.

Nonprofit 13

Nonprofit Diversity Fixed Costs Operations 13

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. This story of disruption should feel familiar.

Energy 15

Energy Transportation Real Estate Software 15

Harvard Business Review

OCTOBER 7, 2015

Sometimes it doesn’t make sense for companies operating in the same space to continually compete. operate in an extremely competitive (borderline oligopolistic) industry. However, free cash flow per share remained impressive at both companies, and fixed cost ratios remained somewhat intact. Example: MineMe Inc.

Balance Sheet 12

Balance Sheet Cash Flow Revenue Reorganization 12