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Computers, tools of the trade, vehicles, and buildings are the best examples of fixedassets. In a nutshell, a fixedasset is anything that a company buys intending to use for more than one year. The challenge that most companies encounter is in deciding what to do when it is time to get rid of assets.
Investing in fixedassets. Investopedia defines an asset as an economically valuable resource owned, controlled, or acquired with the expectation that it will appreciate later. A fixedasset is an asset acquired to liquidate at a later period.
These choices historically conferred advantage – first-mover, scale – but asset-based scale advantages have diminished in recent years, thanks to technology, cheap information, and outsourcing. Assets are important, but they are, increasingly, table stakes in most competitive industries; everyone in the game has them.
Focus on capabilities rather than just fixedassets: Fixedassets, including brands, are more difficult to leverage across diverse businesses and tend to expire, become obsolete, or give way to related services. But we believe a capabilities-driven strategy is the most direct, efficient, and effective way to get there.
For the latter, we measured incumbents’ operational efficiency, commitment to innovation, and defenses against attack. In the durability state, we found efficient, mature industries — think alcoholic beverages or tires and rubber. One way is by reducing dependence on fixedassets.
Some find evidence of a clear improvement of total factor productivity since market-oriented reforms began in 1979, estimating that the increase in TFP contributed about 40% to GDP growth, roughly the same as that contributed by fixedasset investment. There was also a slowdown in TFP after the mid 1990s. by the end of that period.
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