experience curve


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experience curve

or

learning curve

the cumulative process whereby, as the managers and labour force of a firm gain greater experience of a new technology by repetitive contact, they become more efficient at operating it, which enables unit costs of production to be reduced. Additionally familiarity with a technology and the development of associated skills and expertise can provide a platform for further technological advances. Thus, a firm's unique embodied experience can enable it to establish COMPETITIVE ADVANTAGES over rival suppliers.

Experience curve theory states that every time the same task is carried out, then the time taken to complete the task falls by some fixed amount. Thus if a task takes an hour to complete the first time, it will take some proportion less to complete the second time and a similar reduction will take place the fourth time, eighth time and so on, until a stable task time is achieved. Tasks are evaluated on their complexity, the more complex, the lower will be the rate of time reduction. See SPECIALIZATION, PRODUCTIVITY.

experience curve

or

learning curve

the process whereby managers and operators learn from experience how to operate new technologies more effectively over time such that a growing familiarity with, and the repetitive operation of, a new technology enables unit costs of production to be progressively reduced. See PRODUCTIVITY.
References in periodicals archive ?
So while the experience curve and technology diffusion models help us understand business as usual, factors of cost, and replacement user adoption, the engineering community might broaden its thinking about what might enable renewables to meet or exceed expectations.
Eschew management science techniques that try to maximize market share, such as the experience curve and the BCG portfolio matrix.
Similarly, American high-tech companies like Boeing and Intel have long planned both component performances and future costs to improve on even steeper (mathematically defined) slopes reflecting predictable experience curve effects.
The experience curve represents a volume-cost relationship.
According to the experience curve concept, unit manufacturing costs for a product typically decline by some characteristic amount--approximately 20%--each time accumulated out-put of that product is doubled (Source: Boston Consulting Group).
which are realized by keeping crews together and maintaining an active drilling program within a basin to move down the experience curve.
73/W and prices to drop further thereafter, according to the established experience curve for PV technology.
CSP plants coming online in the next few years will undoubtedly help manufacturers further down the experience curve move towards lower costs, as GTM Research forecasts CSP project costs to decline 3% to 7% per year in the period 2010 to 2020.
The 2010 edition extends the previous editions analysis of the impact of new undersea cables into an overview of terrestrial fibre optic networks presently being rolled out across South Africa, and explains the phenomenon of the Experience Curve, which makes it possible to forecast usage patterns going forward 10 years.
An experience curve for integrated circuit manufacture plotted by BCG