BUS350 - Ch.11

Firmsthatsuccessfullydothiscanrealizelocationeconomies

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Unformatted text preview: market conditions. The operations of the firm must support the firm’s strategy. The organizational architecture of the firm must match the firm’s operations and strategy. If market conditions shift, so must the firm’s strategy, operations, and organization. 15 of 40 In Sum: Strategic Fit Strategic Fit 16 of 40 Location Economies Firms should locate value creation activities where economic, political, and cultural conditions are most conducive to the performance of that activity. Firms that successfully do this can realize location economies (the economies that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be). Locating value creation activities in optimal locations • can lower the costs of value creation. • can enable a firm to differentiate its product offering from those of competitors. 17 of 40 Experience Effects The experience curve refers to the systematic reductions in production costs that have been observed to occur over the life of a product. • Studies show that a product’s production costs decline by some quantity about each time cumulative output doubles. 18 of 40 Experience Effects Le...
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This document was uploaded on 03/05/2014.

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