1 / 7

Experience Curves and Strategy

Dr. Galbraith, Mgt 455. Experience Curves and Strategy. Steam Turbine Generator Production Cost (1946 – 1963). Steepness of Experience Curves. Requirements for Steep experience Curves. Labor inputs Mass production of similar items or services Long production cycles

emele
Download Presentation

Experience Curves and Strategy

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Dr. Galbraith, Mgt 455 Experience Curves and Strategy

  2. Steam Turbine Generator Production Cost (1946 – 1963)

  3. Steepness of Experience Curves

  4. Requirements for Steep experience Curves • Labor inputs • Mass production of similar items or services • Long production cycles • Few radical product innovations • Example: Desktop Storage • Rapid Process Innovation

  5. Why is this important strategically? • Understanding Future Prices • Managing internal costs • Understanding Competitive Strategy • Chalkboard discussion Future Photovoltaic Prices

  6. Wrap Up • Impact of experience can be quantified - empirical evidence shows that costs tend to decrease 20-30% as experience in producing a good or delivering a service doubles • This relationship isn't automatic, rather it is the result of conscious actions taken by management to actively bring down costs over time • As a company progresses down the Experience Curve, it should typically decrease its price point as well so as to increase its overall competitive position

More Related