International Product Life Cycle

Dr.K.Prabhakar

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international product life cycle

export net new product mature product standardised product

time

developed country

developing country

inventors country

country where new product is launched other advanced, high-income country developing, low-income country
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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list of innovations
innovating country innovation
rifle with interchangeable parts
railway automatic signal block automatic bottle-making machine United States mass-produced automobile drip-dry shirt atomic reactors

market stimulant
scarcity of artisan labour
high cost of unskilled labour scarcity of artisan labour large size middle-income market high cost of laundries guaranteed military demand

jumbo jet
frozen foods synthetic fertiliser Germany synthetic dyestuffs ethical drugs rayon Japan synthetic paper miniature television

guaranteed military demand

large size middle-income market scarcity of fertile land guaranteed military demand subsidised universal medical care scarcity of raw materials scarcity of raw materials relative small size of homes

source: Raymond Vernon , the economic environment of international business, Prentice-Hall, USA, 1972.
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three stages from the initiating countrys viewpoint

international product life cycle
product stage trade
limited; production for home market

target market

competitors

production cost locally

1 new

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 increase owing to lower economies of scale and comparative disadvantages

3 standardisation

declining export at first; later in phase become imports

USA / inventors country

competitors from mostly developing markets

based on: Raymond Vernon , 1966. International investment and international trade in the product cycle, The Quarterly Journal of Economics, 80(2), pp. 190-207.
provenmodels