GMGT 4010 Lecture Notes - Lecture 5: Cost Leadership

• School: University of Manitoba
• Department: General Management
• Course: GMGT 4010
• Professor: Alok Dua

Document Summary

Economies of scale: when the volume increases, the cost per unit decreases, this is the improvement of efficiency. Diseconomies of scale: when the production increases very high, instead of gaining economies, we get diseconomies because of increased bureaucracy and increased coordination costs. When the quantity gets double, the cost gets down by 20%. Design easily manufacturing products less number of parts core components standardize leads to high quality. Production just in time reduce number of units per set leads to possibility of only few units with bad quality. Marketing brand building quality should be inherent in the product. Innovation: leads the road in all other aspects of efficiency quality efficiency. Why new products fail: insensitive to customers" needs, idea not fully designed, tech myopia, poor product quality, lack of complements, poor commercialization, improper marketing supports, quantum improvements not incremental, bad timing.