Management: Using the learning curve as a management tool: The learning curve can help in preparing cost reduction programs, pricing forecasts, and product development goals

Abstract

In the fierce competition that shook the semiconductor industry in the 1950s, transistor and diode prices tumbled, along with more than a few managerial heads, as company after company discovered the importance of the learning curve. What this taught basically was this: As a manufacturer gains experience in making a product, he should be able to produce it more “cleverly,” more efficiently and in greater volume, and thus be in a position to cut prices. Successful companies applied the learning curve and survived. One way of applying the curve is to ensure volume production quickly by initially heavy investing in capital equipment.