helen mba _2 - Nelson Mandela Metropolitan University

Organisations that move fastest down the experience curve should be operating at alower cost per unit (Johnson & Scholes, 2002:333).Hill (2003:411) explains that an organisation’s production costs decline asaccumulated output doubles. The learning effect is that cost savings come fromlearning by doing. The labour force learns by repetition, while labour productivityincreases over time as individuals learn the most efficient way.2.6.2 Sustaining differentiation-based advantageDavid (2001:181) asserts that different strategies offer different degrees ofdifferentiation. Differentiation does not guarantee a competitive advantage,especially if standard products meet the customer’s needs, or if imitation bycompetitors is possible. Durable products protected by high barriers of entry to quickcopying by competitors are best. A successful differentiation strategy allows anorganisation to charge a higher price for its products and to gain customer loyalty.Conditions to sustain differentiation include the following:• Difficulties of imitation based on core competences. The reason for thisinclude:- Complexity: With differentiation, superior performance is achievedby serving customer needs differently, ideally uniquely. The moreunique the difference, the more sustainable is the advantage. Thecompetences upon which a successful strategy is based are toocomplex for competitors to comprehend (MacMillan and McGrath,1997:135 – 139).- Casual ambiguity: Even if a potential imitator can discern what thelinked competences of a successful strategy are, it may still be64