BUS350 - Ch.11

20 of 40 costpressuresandpressures

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Unformatted text preview: arning effects are cost savings that come from learning by doing. • Labor productivity increases when individuals learn the most efficient ways to perform particular tasks and management learns how to manage the new operation more efficiently 19 of 40 Experience Effects Economies of scale refer to the reductions in unit cost achieved by producing a large volume of a product. Sources include • the ability to spread fixed costs over a large volume • the ability of large firms to employ increasingly specialized equipment or personnel Serving a global market from a single location is consistent with moving down the experience curve and establishing a low‐cost position. 20 of 40 Cost Pressures and Pressures for Local Responsiveness Firms that compete in the global marketplace typically face two types of competitive pressures 1. pressures for cost reductions 2. pressures to be locally responsive These pressures place conflicting demands on the firm. 21 of 40 Pressures for Cost Reductions Pressures for cost reductions are greatest • in industries producing commodity type products that fill universal needs (needs that exist when the tastes and preferences of consumers in different nations are similar if not identical) • whe...
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This document was uploaded on 03/05/2014.

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