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Discuss the concept of Experience Curve and hig...

Discuss the concept of Experience Curve and highlight its relevance in strategic management.

Discuss the concept of Experience Curve and highlight its relevance in strategic management.

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Chiranjibi Chapagain Mar. 16, 2018

Experience curve is similar to learning curve which explains the efficiency gained by workers through repetitive productive work. Experience curve is based on the commonly observed p phenomenon that unit costs decline as a firm accumulates experience in terms of a cumulative volume of production. The implication is that larger firms in an industry would tend to have lower unit costs as compared to those of smaller organizations, thereby gaining a competitive cost advantage. Experience curve results from a variety of factors such as learning effects, economies of scale, product redesign and technological improvements in production.

The concept of experience curve is relevant for a number of areas in strategic management. For instance, experience curve is considered a barrier for new firms contemplating entry in an industry. It is also used to build market share and discourage competition.

Discuss the concept of Experience Curve and highlight its relevance in strategic management.

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