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International Market

International Market

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Published by Hemant Sethi

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Published by: Hemant Sethi on Jun 12, 2010
Copyright:Attribution Non-commercial

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06/03/2011

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INTERNATIONAL PRODUCT LIFE CYCLE
Introduction & Growth Stages
MNC manufactures product in developed countries: export to developingcountries.
Early Maturity
MNC moves production to developing country,begins importing to home country.
Late Maturity
Developing country competitor exports product to MNC Home country:competeswith MNC in imports.
Decline
Developing country targets remain viable target markets for MNC.MNC home country market is diminishing.
PRODUCT INTRODUCTION STAGE
Products are developed and marketed in developed countries
THE GROWTH STAGE
Increasing competition and rapid product adoption
Marketed primarily in developed countries
Product is exported to developing countries
THE MATURITY STAGE
Product is adopted by most target consumers
Sales are leveling off 
Profits decline due to intense competition
Manufacturing operations move to developing countries to takeadvantage of cheap labor
New competitors: firms from developing countries
 
THE DECLINE STAGE
Products are rapidly losing ground to new technologies and product alternatives
Decrease in sales and profits
Product lifecycle is extended through sales to consumers in developingcountries
1.
Introduction
A new product is introduced onto the Marketplace, few people know about it, and itssuccess is rarely guaranteed. Much time and money is invested in promoting this product,and there is either no profit or even a net loss during this period.
2.
Growth
The product starts to grow in popularity, sales increase as advertising starts working andothers start to imitate your product. Profits increase, and your product steadily becomes asuccess.
3.
Maturity
Your product becomes an established part of the Market, but sales start to increase slowlyas competition and pricing factors take place. At this stage advertising costs are at their highest, whilst profits may start to drop. The market for your product could reachsaturation point.
4.
Decline
Sales start to fall, as your product loses its appeal. Profits drop as production is often cut,competition in the marketplace gets stiffer as advertising is cut and plans are made toshelve the product in the future.
5.
Innovation
Innovators take your product and may incorporate it into a new product. This hashappened to the humble FM radio and Camera which you find as a basic feature on mosthand phones. The decline of the original product has just lead onto the use of it on a verynew product.
The product Life Cycle may not end it changes, especially in this century of fast moving technology. Traditionally products faded away into the memories of their users, but haveoften become part of a new product, that faces the same decline in the future.
 
METHODS OF ENTERING
Trading overseas
There are a number ways an organisation can start to sell their products in internationalmarkets.
1. Direct export.
The organisation produces their product in their home market and then sells them tocustomers overseas.
2. Indirect export
The organisations sells their product to a third party who then sells it on within theforeign market.
3.Licensing
Another less risky market entry method is licensing. Here the Licensor will grant anorganisation in the foreign market a license to produce the product, use the brand nameetc in return that they will receive a royalty payment.
4.Franchising
Franchising is another form of licensing. Here the organisation puts together a package of the ‘successful’ ingredients that made them a success in their home market and thenfranchise this package to oversea investors. The Franchise holder may help out by providing training and marketing the services or product. McDonalds is a popular example of a Franchising option for expanding in international markets.
5.Contracting
Another of form on market entry in an overseas market which involves the exchange of ideas is contracting. The manufacturer of the product will contract out the production of the product to another organisation to produce the product on their behalf. Clearlycontracting out saves the organisation exporting to the foreign market.
6.Manufacturing abroad
The ultimate decision to sell abroad is the decision to establish a manufacturing plant inthe host country. The government of the host country may give the organisation someform of tax advantage because they wish to attract inward investment to help createemployment for their economy.
7.Joint Venture
To share the risk of market entry into a foreign market, two organisations may cometogether to form a company to operate in the host country. The two companies may shareknowledge and expertise to assist them in the development of company, of course profitswill have to be shared out also.

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