Drivers of Cost Advantage
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Economies of Scale
-Technical input-Output relationships -Indivisibilities -Specialization
Economies of Learning
Increased individual skills Improved Organizational routines
Residual Efficiency
Organizational slack motivation and organization
Production Techniques
Process Innovation Re engineering of business processes
input costs
location advantage ownership of low cost inputs nonunion labor
capacity utilization
ratio of fixed to variable costs
product design
standardization of designs and components Design for manufacture
