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International Product Life Cycle

Dr.K.Prabhakar
provenmodels
provenmodels
international product life cycle
based on: Raymond Vernon , 1966. International investment and international trade in the product cycle, The Quarterly Journal of
Economics, 80(2), pp. 190-207.
country where new product is launched
other advanced, high-income country
developing, low-income country
new
product
inventors
country
developing
country
developed
country
mature
product
standardised
product
export
net
time
provenmodels
list of innovations
innovating country innovation market stimulant
United States
rifle with interchangeable parts scarcity of artisan labour
railway automatic signal block high cost of unskilled labour
automatic bottle-making machine scarcity of artisan labour
mass-produced automobile large size middle-income market
drip-dry shirt high cost of laundries
atomic reactors guaranteed military demand
jumbo jet guaranteed military demand
frozen foods large size middle-income market
Germany
synthetic fertiliser scarcity of fertile land
synthetic dyestuffs guaranteed military demand
ethical drugs subsidised universal medical care
rayon scarcity of raw materials
Japan
synthetic paper scarcity of raw materials
miniature television relative small size of homes
source: Raymond Vernon , the economic environment of international business, Prentice-Hall, USA, 1972.
provenmodels
three stages from the initiating countrys viewpoint
international product life cycle
product stage trade target market competitors
production
cost locally
1 new
limited;
production for
home market
USA / inventors
country
few local firms initially high
2 mature
increasing
exports
USA, advanced
and later
developing
markets
competitors from
advanced
markets
declining due to
economies of
scale
3 standardisation
declining export
at first; later in
phase become
imports
USA / inventors
country
competitors from
mostly
developing
markets
increase owing
to lower
economies of
scale and
comparative
disadvantages
based on: Raymond Vernon , 1966. International investment and international trade in the product cycle, The Quarterly Journal of
Economics, 80(2), pp. 190-207.

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