reproduce article written then 9 years ago and today is even more valid then.
.
COOPERATION marginal costs
Summary
The Marginal Costs Cooperation (MCC) is a method that comes alive projects for various reasons, mostly economic, may or may not crystallize.
The interest of a starter and knowledgeable about a topic or area to realize a project, will match the interests of a manufacturer that owns the means of production, better use of existing capacities, whether they are productive, administrative, managerial commercial, etc., or a combination of these. The more precisely directed the project to collar bottle "common, the greater the attraction.
In the case of the CCM, partners calculate their mutual services with the additional costs that actually occur. The utility you get from it beyond the marginal cost is shared. Since the additional costs, ie marginal members can not always be calculated exactly to the penny, they should remember these in advance.
Since each partner, in fact, only calculate actual additional costs, the breakeven point, ie the threshold of benefits and risks are considerably lower. Also at first sight the possibility of gain also appears to be less than split the profits, but this is misleading. The CMM should be considered as a dynamic process. First, the lower risk threshold initiates sales processes that have not occurred under conventional calculations and secondly, under joint efforts grow faster the force of attraction, sales, number of units, productivity, profits and thus also participation in the latter. "The need is not a vessel to be filled but a fire to be off." Consequently, success does not grow in proportion to the magnitude of effort and resources employed, but exponentially. One third of joint profits is, therefore, regularly more than the entire gain can achieve alone.
The particular advantages of the CCM are:
1. Considerably strengthens the advantages of marginal costing, because here not only calculates a single person based on their marginal costs, but a whole group, so that the supply becomes noticeably more attractive than its competition. The way to calculate marginal costs, it became the decade of the fifties and sixties in an initial start new businesses. The same is already being done successfully with the CCM in the nineties and as a result of the increasing globalization of world trade will grow in importance.
2. Can concentrate efforts in conjunction with the partners in the minimum set factor, eg in sales to final consumers, purchasing raw materials, capital, orders, expertise, etc., and thus develop greater force of attraction on this factor minimum, what might make one. By joining, even the smallest efforts become more sharp and as stated above, the success grows exponentially.
3. Companies, but also employees, they can dare to business opportunities for the realization of which by themselves would be too weak.
4. The idle capacity (unemployed, machinery, businesses, ideas, skills, know-how, etc.) can be integrated quickly and surely to economic or social environment. This is very important in times good or normal, but even more in hard times, since an increase in a crisis, so do the capabilities untapped. Customers can use these capabilities to better exploited and not always productive, make the disadvantages of the crisis into an advantage, as an engine of development itself. Thus also become more necessary, important and influential power.
5. The integration of individual growth factors to growth automatic processes is performed with threshold values \u200b\u200bdecreased, ie the so-called "impediments minors. " Ultimately, the CCM intensifies and accelerates the process of economic integration and thus social development. Obviously this also applies to countries, states, municipalities and other social institutions and community.
6. Strengthens the effect of group dynamics, as the match of interests and motivations of the partners is greatest. The surprising effect of the CCM is also explained by the improvement of relations invisible tensions and motivations. Relations information, financial and material improved by the partners themselves.
7. The experiences of the successes of participants increase, decrease frustration, which has a drastic effect positive mental approach to the exterior and interior.
How to proceed?
Example:
ABC Inc., company specialized in adhesives for the manufacturing industry had an interest in venture with adhesives and related products in the consumer sector, given that some idle production capacity had some very hard to cover with your business Traditional, on the other hand, had not taken advantage of technological capabilities to an industry that demands high volume and finally required to venture into new business areas to increase the profitability of some of its excess cash and debt capacity appropriate interest rates. Even when they had some technical knowledge of the products had to obtain additional know-how to others or develop suitable suppliers for these, even should invest amounts not very high in certain production equipment for some of these new lines. But not simultaneously possess strategic knowledge how to efficiently develop consumer markets and the building and its contractors. To this was added, which did not have the commercial team to undertake the project. In a way, they faced a clear impasse, because it was too risky to invest in increased personnel for the new area, make certain investments, acquiring new raw materials for some products that did not run regularly, face strong competitors in their markets well established, but without possessing the knowledge and approach it strategically and commercially. In the process
ABC executives discussed the project with Peter Stratagems, an adviser to a potential supplier of a product they did not manufacture. Displaying the great opportunity of business development, ABC Stratagems proposes a CCM:
· the ABC overhead costs are already covered with its traditional business, so do not integrate the new business
· is creating a new division within The company, called consumer and construction, which uses productive capacities, offices, warehouses, and existing technology and made significant investments so no initial
· the new investment in equipment needed are not loaded to the new division, but is billed on a variable-hours use, for and run a scheme to establish
¯ costs of new raw materials are variable and dependent on business success, but through your contacts, you can get for ABC Stratagems good payment period and very competitive prices, even for some of these raw materials, can achieve some exclusives from some suppliers
· Stratagems has the strategic knowledge, business and personal contacts in the areas of business loss from ABC, is a specialist area, which proposes to integrate CCM with them, but part time for other long-term commitments acquired with their customers. For their participation in this strategic and commercial development, development of strategic suppliers and part-time monitoring of progress and business decisions, 25% perceived marginal utility generated that ABC billed monthly and the payment of certain expenses like eg business travel related to this division. Not incorporate any costs to not load with higher costs of CCM.
· Suggests incorporated into the CCM to a full time Commercial Director, a specialist in the area, which would be paid a basic income of $ 2,000 plus 15% interest in monthly marginal utility generated by that division, the manager would be hired by ABC, but would sign a long term contract to provide services to ABC for the full-time development of this division and be responsible for arming the sales team in line with Stratagems and ABC. Travel expenses will be reimbursed and mobilization, but also receive higher benefits to avoid increasing costs in the CCM.
· A selected vendors that might also ABC serve outside, but full-time, would be paid a basic income of $ 500, plus 20% interest in the marginal utility generated monthly with their customers.
• The 40% stake in the remaining marginal utility, this corresponds to ABC.
Stratagems The proposal seemed very interesting and attractive to ABC because it would not only solve the internal bottlenecks that slowed the project but also would grant the highly competitive business, rapid growth, and participation with a high degree of motivation of the members. What
would be the next steps?
first had to establish a plan to bring the project to paper and from paper to practice. Should also contact the Commercial Director and consider the project. And formed the core team would have to agree on the following:
• How the tasks are distributed among the partners?
• What services or benefits (labor, capital, ideas, etc.) Should provide what and what time?
• How ultimately be remunerated these services and benefits? Within this context, we had to define the additional cost (marginal) to bring effective each participant in the CCM. In case some are unable to calculate costs and determine exactly, would agree to set them approximately fixed in advance by mutual agreement. Also establish that it would be wrong to adhere pedantically to marginal or additional costs and real respectively and it was decisive, bringing together the partners needed really important.
• What actual costs must perform each of the partners, which would be charged in a joint account (account sharing)?
• How will distribute profits or losses in the end?
• Who would lead the joint account of participation and who checks (external auditor)? It was agreed that despite having the largest of the trust between the participants, should be agreed to perform an audit done every three months, thereby maintaining the confidence of the group.
They also agree, there are always more interested partners than others. The art would be crucial to adapt the distribution of tasks, contributions, refunds, risks and benefits to the different interests of everyone. Finally
all participants would agree, that had spare capacity, ie, "growth factors wasted." Under normal conditions, this successful business today, has not been performed at the same rate of growth. After a few years and a large market share, having successfully completed its role in starting and structuring the business strategically, Stratagems ABC sold its stake in the business and returned to his advice, which still include a more specific aspects ABC . Commercial Director and much of the sales continue to grow successfully with this division of ABC.
is very normal for someone to have an idea, project or a possibility, but found no partners required to implement it. Most consider it an inescapable fate and give up. But this is wrong. Should increase motivation and hence the interest of those who could be considered as partners. This happens for example with the CCM, which increases the opportunities and reduces risks. The only real bottleneck is the lack of imagination to mentally transpose the situation itself, the possibilities offered by the perspective of the CCM.
Summary
The Marginal Costs Cooperation (MCC) is a method that comes alive projects for various reasons, mostly economic, may or may not crystallize.
The interest of a starter and knowledgeable about a topic or area to realize a project, will match the interests of a manufacturer that owns the means of production, better use of existing capacities, whether they are productive, administrative, managerial commercial, etc., or a combination of these. The more precisely directed the project to collar bottle "common, the greater the attraction.
In the case of the CCM, partners calculate their mutual services with the additional costs that actually occur. The utility you get from it beyond the marginal cost is shared. Since the additional costs, ie marginal members can not always be calculated exactly to the penny, they should remember these in advance.
Since each partner, in fact, only calculate actual additional costs, the breakeven point, ie the threshold of benefits and risks are considerably lower. Also at first sight the possibility of gain also appears to be less than split the profits, but this is misleading. The CMM should be considered as a dynamic process. First, the lower risk threshold initiates sales processes that have not occurred under conventional calculations and secondly, under joint efforts grow faster the force of attraction, sales, number of units, productivity, profits and thus also participation in the latter. "The need is not a vessel to be filled but a fire to be off." Consequently, success does not grow in proportion to the magnitude of effort and resources employed, but exponentially. One third of joint profits is, therefore, regularly more than the entire gain can achieve alone.
The particular advantages of the CCM are:
1. Considerably strengthens the advantages of marginal costing, because here not only calculates a single person based on their marginal costs, but a whole group, so that the supply becomes noticeably more attractive than its competition. The way to calculate marginal costs, it became the decade of the fifties and sixties in an initial start new businesses. The same is already being done successfully with the CCM in the nineties and as a result of the increasing globalization of world trade will grow in importance.
2. Can concentrate efforts in conjunction with the partners in the minimum set factor, eg in sales to final consumers, purchasing raw materials, capital, orders, expertise, etc., and thus develop greater force of attraction on this factor minimum, what might make one. By joining, even the smallest efforts become more sharp and as stated above, the success grows exponentially.
3. Companies, but also employees, they can dare to business opportunities for the realization of which by themselves would be too weak.
4. The idle capacity (unemployed, machinery, businesses, ideas, skills, know-how, etc.) can be integrated quickly and surely to economic or social environment. This is very important in times good or normal, but even more in hard times, since an increase in a crisis, so do the capabilities untapped. Customers can use these capabilities to better exploited and not always productive, make the disadvantages of the crisis into an advantage, as an engine of development itself. Thus also become more necessary, important and influential power.
5. The integration of individual growth factors to growth automatic processes is performed with threshold values \u200b\u200bdecreased, ie the so-called "impediments minors. " Ultimately, the CCM intensifies and accelerates the process of economic integration and thus social development. Obviously this also applies to countries, states, municipalities and other social institutions and community.
6. Strengthens the effect of group dynamics, as the match of interests and motivations of the partners is greatest. The surprising effect of the CCM is also explained by the improvement of relations invisible tensions and motivations. Relations information, financial and material improved by the partners themselves.
7. The experiences of the successes of participants increase, decrease frustration, which has a drastic effect positive mental approach to the exterior and interior.
How to proceed?
Example:
ABC Inc., company specialized in adhesives for the manufacturing industry had an interest in venture with adhesives and related products in the consumer sector, given that some idle production capacity had some very hard to cover with your business Traditional, on the other hand, had not taken advantage of technological capabilities to an industry that demands high volume and finally required to venture into new business areas to increase the profitability of some of its excess cash and debt capacity appropriate interest rates. Even when they had some technical knowledge of the products had to obtain additional know-how to others or develop suitable suppliers for these, even should invest amounts not very high in certain production equipment for some of these new lines. But not simultaneously possess strategic knowledge how to efficiently develop consumer markets and the building and its contractors. To this was added, which did not have the commercial team to undertake the project. In a way, they faced a clear impasse, because it was too risky to invest in increased personnel for the new area, make certain investments, acquiring new raw materials for some products that did not run regularly, face strong competitors in their markets well established, but without possessing the knowledge and approach it strategically and commercially. In the process
ABC executives discussed the project with Peter Stratagems, an adviser to a potential supplier of a product they did not manufacture. Displaying the great opportunity of business development, ABC Stratagems proposes a CCM:
· the ABC overhead costs are already covered with its traditional business, so do not integrate the new business
· is creating a new division within The company, called consumer and construction, which uses productive capacities, offices, warehouses, and existing technology and made significant investments so no initial
· the new investment in equipment needed are not loaded to the new division, but is billed on a variable-hours use, for and run a scheme to establish
¯ costs of new raw materials are variable and dependent on business success, but through your contacts, you can get for ABC Stratagems good payment period and very competitive prices, even for some of these raw materials, can achieve some exclusives from some suppliers
· Stratagems has the strategic knowledge, business and personal contacts in the areas of business loss from ABC, is a specialist area, which proposes to integrate CCM with them, but part time for other long-term commitments acquired with their customers. For their participation in this strategic and commercial development, development of strategic suppliers and part-time monitoring of progress and business decisions, 25% perceived marginal utility generated that ABC billed monthly and the payment of certain expenses like eg business travel related to this division. Not incorporate any costs to not load with higher costs of CCM.
· Suggests incorporated into the CCM to a full time Commercial Director, a specialist in the area, which would be paid a basic income of $ 2,000 plus 15% interest in monthly marginal utility generated by that division, the manager would be hired by ABC, but would sign a long term contract to provide services to ABC for the full-time development of this division and be responsible for arming the sales team in line with Stratagems and ABC. Travel expenses will be reimbursed and mobilization, but also receive higher benefits to avoid increasing costs in the CCM.
· A selected vendors that might also ABC serve outside, but full-time, would be paid a basic income of $ 500, plus 20% interest in the marginal utility generated monthly with their customers.
• The 40% stake in the remaining marginal utility, this corresponds to ABC.
Stratagems The proposal seemed very interesting and attractive to ABC because it would not only solve the internal bottlenecks that slowed the project but also would grant the highly competitive business, rapid growth, and participation with a high degree of motivation of the members. What
would be the next steps?
first had to establish a plan to bring the project to paper and from paper to practice. Should also contact the Commercial Director and consider the project. And formed the core team would have to agree on the following:
• How the tasks are distributed among the partners?
• What services or benefits (labor, capital, ideas, etc.) Should provide what and what time?
• How ultimately be remunerated these services and benefits? Within this context, we had to define the additional cost (marginal) to bring effective each participant in the CCM. In case some are unable to calculate costs and determine exactly, would agree to set them approximately fixed in advance by mutual agreement. Also establish that it would be wrong to adhere pedantically to marginal or additional costs and real respectively and it was decisive, bringing together the partners needed really important.
• What actual costs must perform each of the partners, which would be charged in a joint account (account sharing)?
• How will distribute profits or losses in the end?
• Who would lead the joint account of participation and who checks (external auditor)? It was agreed that despite having the largest of the trust between the participants, should be agreed to perform an audit done every three months, thereby maintaining the confidence of the group.
They also agree, there are always more interested partners than others. The art would be crucial to adapt the distribution of tasks, contributions, refunds, risks and benefits to the different interests of everyone. Finally
all participants would agree, that had spare capacity, ie, "growth factors wasted." Under normal conditions, this successful business today, has not been performed at the same rate of growth. After a few years and a large market share, having successfully completed its role in starting and structuring the business strategically, Stratagems ABC sold its stake in the business and returned to his advice, which still include a more specific aspects ABC . Commercial Director and much of the sales continue to grow successfully with this division of ABC.
is very normal for someone to have an idea, project or a possibility, but found no partners required to implement it. Most consider it an inescapable fate and give up. But this is wrong. Should increase motivation and hence the interest of those who could be considered as partners. This happens for example with the CCM, which increases the opportunities and reduces risks. The only real bottleneck is the lack of imagination to mentally transpose the situation itself, the possibilities offered by the perspective of the CCM.
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