THE EXPERIENCE CURVE

Question 1

When does the experience curve occur

Answer 1

The experience curve occurs when an organisation experiences lower average costs as a result of an organisation’s cumulative output.

Question 2

How do businesses decrease the average cost

Answer 2

The more organisations produce over time, means that the average costs will also decrease.

Question 3

When do experience curves occur

Answer 3

Organisations refine production processes over time so that they become more efficient

Workers skill level increase the more units o0f output are produced

The power of corporate learning and group memory/ experience

Question 4

When do implications occur

Answer 4

There are cost benefits to achieving increased market share

Expertise can become barrier to entry through lowering production costs

Gains are made when production increases and not over time - fast expansion is beneficial