IMA 11 Experience Curve Effect at Fachhochschule des Mittelstands

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Study with flashcards and summaries for the course IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

How was the Experience Curve identified/ developed 

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

Define the Experience curve effect 

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

Why is the experience curve an instrument of (strategic) MA ? 

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

What is the difference between the learning curve and the experience curve ? 

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

Name the potential drivers for experience curve effect

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

Name the limitations of the experience curve effect

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

By what inflation adjusted constant rate does the cost per unit decrease ? 

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

How is the experience rate determined?

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

With which Matrix is the Experience Curve connected ?

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

Explain how the experience curve effect and the BCG Matrix are interlinked 

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

If there is/or you are a big player in the market that sells high volumes it is nearly impossible for other to ...

Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

What is the average experience rate ?

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Exemplary flashcards for IMA 11 Experience Curve Effect at the Fachhochschule des Mittelstands on StudySmarter:

IMA 11 Experience Curve Effect

How was the Experience Curve identified/ developed 
In business practice (empirical study) 

looking into business practice and then identify phenomena and then try to explain = empirical

IMA 11 Experience Curve Effect

Define the Experience curve effect 
Describes the observation of declining inflation-adjusted costs per unit in relation to the total quantity produced within a period of time.
-> With every doubling of the cumulative (everything up to this point ! Since production was started) quantity produced , the costs per unit will decrease by a certain percentage 

e.g. the assembly times of an aircraft decline over time due to learning effects,  the assembly hours decrease by a constant percentage whenever production volumes double , repeated execution of individual work procedures reduce assembly costs 

IMA 11 Experience Curve Effect

Why is the experience curve an instrument of (strategic) MA ? 
It.s used to analyze the long term cost position of companies ( prediction to the future . Can we compete with our competitors in the future? Or can we change sth. In our product to be able to compete) So its future orientated decision making support) 


IMA 11 Experience Curve Effect

What is the difference between the learning curve and the experience curve ? 
Learning curve refers to the relationship between the frequency of repetition of a process and the input/ output relationship of that process 

experience curve applies to to all costs (R&D, Production, Marketing, Administration and Capital costs ( aquisition)

IMA 11 Experience Curve Effect

Name the potential drivers for experience curve effect
Reduced assembly costs an times ( learning effect = lower Labour costs / unit ) 

rationalization ( all actions that lead to higher production & profit and less costs) 

efficient supply chain 

innovation/ improvement in organizational structures & business processes 

external learning effects trough additional knowlege ( e.g. consultants, cooperation with partners) 

IMA 11 Experience Curve Effect

Name the limitations of the experience curve effect
-> it is no automatic mechanism 

the experience curve is not a general law or rule that describes the effect of management decisions on costs 

depends on capability of management to discover and use cost reduction potential and to make appropriate decisions 

can be observed in practice and can be tested empirically

IMA 11 Experience Curve Effect

By what inflation adjusted constant rate does the cost per unit decrease ? 
(20-30% with every doubling of the cumulative production quantity in this example as it is for common industrial products ) but in reality the figure comes from observed values

IMA 11 Experience Curve Effect

How is the experience rate determined?

In empirical studies , separately for different industries

IMA 11 Experience Curve Effect

With which Matrix is the Experience Curve connected ?
With the BCG Matrix ( Boston consulting group ) 

IMA 11 Experience Curve Effect

Explain how the experience curve effect and the BCG Matrix are interlinked 
A high market share = high cumulative quantity produced = strong impact of the experience curve effect: better position than competitors , because prices go down 

in other words: you can only sell at attractive prices if you reach high quantitíes and when your cost goes down . With high numbers AND the experience curve effect automatically your cost goes down so you can give a discount and that helps you to maintain high numbers in the market 


IMA 11 Experience Curve Effect

If there is/or you are a big player in the market that sells high volumes it is nearly impossible for other to ...
Competed with him/ me based on price or cost 

so : big player in the market -> don.t compete with him based on price . Be innovative and find other ways ( fancier, better quality, better advertising) 

IMA 11 Experience Curve Effect

What is the average experience rate ?
20-30% for industrial products and consumer goods 

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