EXPERIENCE CURVE
The concept of an experience curve attempts to capture both learning effects and process improvements. In this perspective, economies of learning allow movement down a given learning curve based on current production technology. By moving further down a given learning curve than competitors, a firm can gain a competitive advantage. For example, Exhibit 6.6 shows that Finn B is further down the blue (90 percent) learning curve than Finn A. Finn B leverages economies of teaming due to larger cumulative output to gain an advantage over Firm A. As we know, however, technology and production processes do not stay constant. Process innovation—a new method or technology to produce an existing product—may initiate a new and steeper learning curve. If Finn C is able to implement a new production process (such as lean manufacturing), it initiates an entirely new and steeper learning curve. In Exhibit 6.6, Finn C is able to gain a competitive advantage over B through process innovation. This allows Finn C to jump down to the green (80 percent) learning curve, reflecting the new and lower-cost production process introduced. Also as shown in Exhibit 6.6, by capturing experience-curve effects (learning effects plus process innovation), Finn D is breaking away from Finn C, gaining a competitive advantage. Finn D is able to implement a cost-leadership strategy and enjoy a competitive advantage over Firms A, B, and C. Taken together, learning by doing allows a firm to lower its per-unit costs by moving down a given learning curve, while combining experience-based learning and process innovation allows the firm to leapfrog to a steeper learning curve, thereby further driving down its per-unit costs. In summary, by choosing a cost-leadership strategy, managers must focus their attention on lowering the overall costs of producing the product or service while maintaining an acceptable level of quality that will serve the needs of the customer. Cost leaders appeal to the price-conscious buyer, whose main criterion is the price of the product or service. By attending to the reduction of costs in each value chain activity, managers aim to achieve the lowest cost position in the industry. This provides the ability to offer the lowest price in the market and the consequent ability to attract an increased volume of sales. As successful cost leaders such as Walmart illustrate ("Every Day Low Prices"), this strategic position can be a very profitable business.
ประสบการณ์เส้นโค้ง The concept of an experience curve attempts to capture both learning effects and process improvements. In this perspective, economies of learning allow movement down a given learning curve based on current production technology. By moving further down a given learning curve than competitors, a firm can gain a competitive advantage. For example, Exhibit 6.6 shows that Finn B is further down the blue (90 percent) learning curve than Finn A. Finn B leverages economies of teaming due to larger cumulative output to gain an advantage over Firm A. As we know, however, technology and production processes do not stay constant. Process innovation—a new method or technology to produce an existing product—may initiate a new and steeper learning curve. If Finn C is able to implement a new production process (such as lean manufacturing), it initiates an entirely new and steeper learning curve. In Exhibit 6.6, Finn C is able to gain a competitive advantage over B through process innovation. This allows Finn C to jump down to the green (80 percent) learning curve, reflecting the new and lower-cost production process introduced. Also as shown in Exhibit 6.6, by capturing experience-curve effects (learning effects plus process innovation), Finn D is breaking away from Finn C, gaining a competitive advantage. Finn D is able to implement a cost-leadership strategy and enjoy a competitive advantage over Firms A, B, and C. Taken together, learning by doing allows a firm to lower its per-unit costs by moving down a given learning curve, while combining experience-based learning and process innovation allows the firm to leapfrog to a steeper learning curve, thereby further driving down its per-unit costs. In summary, by choosing a cost-leadership strategy, managers must focus their attention on lowering the overall costs of producing the product or service while maintaining an acceptable level of quality that will serve the needs of the customer. Cost leaders appeal to the price-conscious buyer, whose main criterion is the price of the product or service. By attending to the reduction of costs in each value chain activity, managers aim to achieve the lowest cost position in the industry. This provides the ability to offer the lowest price in the market and the consequent ability to attract an increased volume of sales. As successful cost leaders such as Walmart illustrate ("Every Day Low Prices"), this strategic position can be a very profitable business.
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