Cost-Leadership Strategy: Understanding Cost-Drivers
9 important questions on Cost-Leadership Strategy: Understanding Cost-Drivers
What is a Cost Leader?
Which Cost Drivers can managers manipulate to keep the costs low?
- Economies of Scale
- Learning-curve effects
- Experience-curve effects
What are Economies of Scale?
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What is 'Minimum Efficient Scale'? (MES)
What are Diseconomies of Scale?
As firms get too big, the complexity of managing and coordinating raises the cost.
What does Economies of Scale allow firms?
(=Reduce fixed cost/unit)
- Use specialised systems and equipment
How do Learning Effects differ from Economies of Scale?
- Differences in Complexity
Learning Effects VS Economies of Scale: Differences in Timing
- occur over time as output accumulates
- captured at one point in time when output increases
Learning Effects VS Economies of Scale: Differences in Complexity
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