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 ?
In general, for the analysis of grid parity dynamics in time, the critical input parameters are the learning factor and the growth rate of the relevant global industry (both key drivers of the experience curve), and the electricity price trends.
No Experience Curve. In a factory, knowledge accumulated through costly trial and error is documented, stored, and used continuously to improve assembly lines, products, and routines.
The inexorable logic of the experience curve applies to countries just as it applies to companies.
The limited view of experience curves is that the key metric of installed capacity is descriptive of past events that might not reflect future trends-and cost or price parity itself is not the pure determinant of successful user adoption.
"The Decline of the Experience Curve." Fortune (October 5): 139-146.
* 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.
Apparently the "experience curve" effect is completely offset by rising operating and maintenance costs as a plant ages.(6)
The experience curve represents a volume-cost relationship.
The experience curve is assumed to have a true experience coefficient, b.
During the product production process, an experience curve model is created that helps marketers determine critical tactics in business strategy development.
* Creating specialized skills and exploiting experience curve benefits.