There are key differences between economies of scale and learning effects. Consider: A company such as Intel which has a complex design and manufacturing process. For instance, one fabrication line for semiconductors typically costs more than $1.5 bn to build. Yet the industry also has high human costs for research and development (R&D) departments. Semiconductor firms spend an average of 17% of revenue on R&D. For comparison, the automobile industry spends on average 3% of their sales on R&D. Thus Intel must be concerned with both scale of production and learning curves. When do you think managers should be more concerned with large scale production runs, and when do you think they should be most concerned with practices that foster or hinder the hiring, training, and retention of key employees?
There are key differences between economies of scale and learning effects. Consider: A company such as Intel which has a complex design and manufacturing process. For instance, one fabrication line for semiconductors typically costs more than $1.5 bn to build. Yet the industry also has high human costs for research and development (R&D) departments. Semiconductor firms spend an average of 17% of revenue on R&D. For comparison, the automobile industry spends on average 3% of their sales on R&D. Thus Intel must be concerned with both scale of production and learning
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