PRODUCT LIFE CYCLE THEORY PDF

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Products life cycle theory, product varieties and lower costs, scale benefits, new trading theory, factors and benefits that primarily affect international market profits....

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PRODUCT LIFE CYCLE THEORY In the mid-1960 's, Raymond Vernon proposed a product lifecycle theory based on the observation that for most of the 20th century, a significant proportion of new products in the world were thought-out companies and if they were first sold on this market (e.g. Cars, televisions, instant messaging, copiers, personal computers and semi-rivers). To explain this, Vernon claimed that US market prosperity and size have given US companies a great incentive to develop new consumer products. In addition, high domestic labour costs have encouraged companies to devise economic innovations. But if the American company invented the product and sells it first in the United States, it does not mean that it should be manufactured in that country. It could be produced cheaper and then exported to the United States. However, Vernon noted that most of the new products were first produced in this country. It seems that innovative companies prefer the fact that the means of production are close to the market and decision-making centres, because of the uncertainties and risks associated with the introduction of new products. Moreover, their argument is not based on price factors. As a result, companies can charge relatively high prices for new products, thus eliminating the need to search for cheap production sites in other countries. In addition, Vernon noted that differentiating the new product lifecycle at the beginning, while demand is growing rapidly in the US, in other developed countries, it is limited to high-income groups. Due to this limited initial demand in other developed countries, companies do not want to produce a new title but use imports from the United States. Over time, demand for the new product grew in other developed countries (such as the UK, France, Germany and Japan). As a result, producers in these countries are already very suitable for producing their domestic market. In addition, US companies can create production centres in developed countries where demand is rising. Production in these latter limits hence the possibility of exporting from the United States. When the market matures in the US and other developed countries, the product is normalized, and the price becomes the main competitive weapon. When this happens, cost considerations begin to represent a larger part of the competition system. Producers in developed countries with lower labour costs than in the United States (such as Italy or Spain) can export to that country. If the cost pressures increase, the cycle does not end there. A cycle in which the United States loses its interest in relation to other developed countries is repeated because developing countries (such as Thailand) are benefiting from a productive advantage in the developed world. The world production leader will therefore move from the United States to other developed countries and then to developing countries.

As a result of these trends the global trading system is that over time, the United States will move to export product imports because the production focuses on cheap places overseas. Evaluation of product life cycle theory Historically, the product lifecycle theory gives the correct explanation in the structure of international trade. Take photocopiers, for example. Xerox invented them in the early 1960 's in the United States and sold them first to land users. Initially, the company took copier machines from the United States to Japan and other developed Western European countries. When demand grew in these countries, Xerox established joint ventures to start production in Japan (Fuji-Xerox) and the UK (Rank-Xerox). Furthermore, when Xerox copy of the patent copying process ended, other foreign competitors entered the market (e.g. Canon in Japan and Olivetti in Italy). As a result, U.S. exports declined and American users were rubbing photocopier with cheap suppliers, especially in Japan. Later, Japanese companies saw the manufacturing costs in their home country very high, transferring production to developing countries such as Singapore and Thailand. So first the United States and then other developed countries (such as Japan and the United Kingdom) have moved from copier machines to importers. This change in the international trade in photocopiers is consistent with the product lifecycle theory that mature industries move from the United States and move with affordable assembly sites. However, there is no shortage of weaknesses in the life cycle theory of the product. From an Asian or European perspective, Vernon's reasoning that most new products were invented and presented in the United States, is ethnocentric. It may be true that, except for the global economic domination (1945-1975), almost all new products were introduced in this country, but there have always been considerable exceptions that have become more common in recent years. Nowadays, Japan introduces many new products (e.g. video game consoles) or Europe (new mobile phones). Due to the increasing globalization and integration of the global economy, more and more new products (laptops, CDS, digital cameras) will be deployed at the same time in the United States, Japan and countries. European. Developed. This leads to decentralized production, where parts of the new product are produced in places of the world where the blend of skills and factor costs is more favorable (as the theory of comparative advantage predicts). In short, while the Vernon's theory explains the international trade model for a short period of American domination, its importance to the modern world is limited. New Trading theory The new trading theory was born in the 1970 century, when several economists stated that companies ' ability to achieve scale benefits would have a significant impact on international trade. Scale benefits are reductions in unit costs

for large volumes of production. The scale benefits originate from a variety of sources, including the ability to distribute fixed costs to a large amount and the ability of large producers to use more productive skilled workers and equipment. Scale benefits are a significant cost reduction cause in many areas: software, automotive, pharmaceuticals and aerospace. For example, Microsoft achieves a scale of benefits by spreading the fixed costs of developing new versions of its Windows operating system (which are in order $5 000 000 000) among the approximately 250 000 000 computers the programs have configured. Similarly, auto companies achieve scale advantages by generating many vehicles in the assembly line, where each worker has a special function. The new trade theory has two important points. Firstly, the trade resulting from its impact on scale benefits, increases the products available to consumers and lowers their costs. Secondly, in areas where the output scale to achieve the benefits of production constitutes a significant proportion of total global demand, the global market supports only a few companies. Therefore, the world trade in certain products is dominated by countries whose businesses have begun to produce. More different products and lower costs First imagine a world without trade. In areas where the scale benefits are significant, the country can produce a variety of goods, and the extent of this production is limited by the size of the market. If the internal market is small, there is not enough demand for producers to achieve scale benefits in the manufacture of certain products. Therefore, it may not be possible to produce these products, which limits the range of products available to consumers. They are also possible to produce, but volumes, such as unit costs and prices, are much higher than they would be in the scale of interest. Now let us think of what happens when nations are trading. The domestic market is moving to larger global markets. When the market develops through trade, companies can achieve greater scale benefits. According to the new trade theory, every nation can specifier in a limited range of products that it would not do without trade. But at the same time, by purchasing goods from other countries, each country adds a variety of goods offered to consumers and lowers the cost of these goods. Trade opens the opportunity to make profits for everyone, even though countries do not differ in terms of resources and technology. Suppose there are two countries, each with an annual market for millions of cars. By negotiating with each other, these countries can form a combined market value for 2 000 000 cars. In this market, because larger scale benefits can be created, cars more versatile (more models) are produced at lower prices than any separate market. For example, suppose that the demand for sports cars is limited to 55 000 units in each market; Production of at least 100 000 units per year would require significant scale benefits. Demand for compact vans would also be 80 000 units in each domestic market, and production is at least 100 000 per year in order to achieve the necessary scale of benefits. Given the low demand on the domestic market, the companies in each country decide not to produce sports cars, because the cost of production is so low. Although they produced compact trucks, their price

is higher, as well as prices, as they would have had significant scale benefits. But when both countries decide to trade, one nation's company can speciappoint in the production of sports cars, while another company produces compact vans. 110 000-The total demand for sports cars and 160 000 vans would allow each company to achieve scale benefits. Consumers would benefit from having a product (sports cars) that they would not receive before international trade and would also benefit from the low price of the product (compact vans), which could not be manufactured in the past by the volume is the most effective. From this point of view, trade benefits both countries because it promotes production specialisation, scale benefits, production of various products and lower prices. The interests of the first and the trading system. Another issue of the new trade theory is that the world economy's trading system is the result of scale benefits and the benefits of first action. The benefits of the first action are the economic and strategic benefits that the economic sector can get first. The ability to achieve scale benefits in other countries and thus benefit from a lower cost structure is the first important advantage. The new trade theory shows that in products with significant scale benefits and a significant proportion of global demand, those who are first in this sector will benefit from the costs incurred. It is almost impossible to get. It will happen later. Thus, the commercial system of these products reflected the benefits of the first action. There are countries that dominate the export of certain products, because the scale benefits are important in their production and because the companies there were the first to achieve scale benefits, which gave them an advantage. Take, for example, the commercial aviation industry, which benefits from large scale benefits, because its ability to spread the fixed costs of developing new aircraft is a large amount of sales. Airbus Industries has about $14 000 000 000 developing a new 550-Seat Jumbo Jet, A380. Airbus must sell at least 250 A380s. But the total demand for this airplane over the next 20 years is estimated at 400600 units. As a result, the world market only supports the benefit of Jumbo-class aircraft producers. The European Union could manage the export of very large aircraft, not only because the European airline, Airbus, was the first to manufacture a 550-seater aircraft and to achieve scale advantages. Other potential producers, such as Boeing, Should be excluded from the market because they would not have the scale benefits that Airbus enjoys. To gain access to this market category, Airbus has gained interest based on scale benefits. It is difficult for its competitors to achieve this, which makes the European Union the main exporter of very large aircraft. It should be noted that Boeing does not believe that the market is large enough to support the producer's profitability. As a result, Boeing decided to build a similar aircraft and focused on its highly efficient model, 787. The effects of the new trade theory

The new trade theory has significant implications, especially when it says that peoples should benefit from trade, even if their resources and technology do not change. Through trade, the country can specialize in the production of certain products, achieve scale benefits and lower production costs and buy goods that it does not produce from other countries specialising in these products. With this mechanism, the products available to consumers in each country are increasing, while their average costs are reduced, such as price, releasing resources to produce other goods and services. The theory also shows that the country can control the good export only because one or more of its companies produced it first. As the scale benefits materialised, those who act first in the economic field have been locked into the global market, which will discourage other income. Those who are the first to exploit the increasing yields can have a market entry barrier. In the commercial aviation sector, the fact that Boeing and Airbus are already present and utilises the benefits of scale benefits, from manure to new entry and strengthens the United States and Europe's dominant position in aircraft trade is medium-sized and large. This dominant position will be further strengthened as global demand may not be enough to profitably support another large and medium-sized aircraft producer. While Japanese companies can compete in the market, they have decided not to decide, but the partner is a large subcontractor with large producers (for example, Mitsubishi Heavy Industries is one of Boeing's leading subcontractors 777 and 787) projects. The new trade theory is a variation of the Heckscher-Ohlin theory, which states that the country controls the export of a product if it has a higher number of factors that are widely used in production. New trade theorist explains that the United States is the largest exporter of commercial aircraft, not because it has more factors needed in the production of aircraft, but because one of the first companies to become a Boeing, is an American. The new trade theory has no variation in the theory of comparative advantage. Scale benefits increase productivity. Thus, the new trade theory is a significant source of this comparative advantage. This theory is very useful in explaining trading systems. Empirical studies support the theories that trade increases specification in the production sector, increasing the range of products to consumers and lowering prices on average. In the interests of first act and international trade, the study by Harvard Business historian Alfred Chandler shows that the first-acting benefits are a robust explanation of the dominance of companies in some countries. Areas. The number of companies is very small in several global industries: chemical compounds, heavy construction machinery, trucks, tyres, equipment, aircraft engines and software. Perhaps the most questionable effect of the new trade theory is its opposition to government intervention and strategic trade policy. New marketing theorist emphasize happiness, entrepreneurship and innovation to give the company the benefits of acting first. According to this reasoning, Boeing was the first to have participated in the manufacture of commercial aircraft (not D'Havilland and Hawke Sidney, or Fokker, from Holland who were in the same position) was that Boeing was lucky and innovative. Boeing was fortunate that

DeHavilland lost when it became clear that its comet commercial aircraft, which had been two years earlier than Boeing's first plane, 707, was full of serious technical flaws. If DeHavilland had not made major technological mistakes, the UK would have become the world's largest exporter of commercial aircraft. The Boeing innovation has demonstrated that the independent development of the technical capacities needed to build a commercial aircraft has proved to be established. However, several new trade theorists point out that the U.S. government has largely paid Boeing's R and d.M. costs. 707 is the result of a government-funded military program (Airbus access to the industry has also received Significant public grants). Here is the logic of government intervention: complex and well-thought-out grants can lead to the government increasing the chances that its domestic companies will become the first in new areas, such as the US government. Boeing and the European Union with Airbus? If this mechanism is possible and the new trade theory proves that it is, we have the financial reason for an active trade policy that differs from the trade theories made by Vapaakauppasuositukset being investigated so far. National Competitive Advantage: Porter's diamond In 1990, Michael Porter of Harvard Business School published extensive research findings to determine why some peoples prosper and others fail in international competition. Porter and his team studied 100 industries from 10 nations. As in the work of the new trade theorist, this work was based on the perception that the theories of international trade explained only one aspect of the situation. The essential function of the porter was to explain why the nation is flourishing internationally in an area. What does Japan do so well in the automotive industry? Why Switzerland excel in the production and export of precision instruments and pharmaceuticals? Why is Germany and the United States leading the chemical compound industry? The Heckscher-Ohlin theory does not give an immediate answer, and the theory of comparative advantage only provides a partial explanation. The theory of comparative advantage would mean that Switzerland would shine on the production and export of precision instruments, since it has an effective impact on the resources in its sector. This is true, but it does not explain why Switzerland is more productive in this area than in the UK, Germany or Spain. Porter tries to solve the riddle. Porter argues that the Four Nations ' general attribute defines the environment in which local businesses compete, and that these characteristics promote or hinder the creation of a competitive advantage. Attributes are: • • •

Factors Endowment. The situation of the country in terms of production factors, such as skilled workers or the infrastructure needed to compete in industry. Terms of use. The characteristics of the product or service internal demand. And support sectors. Presence or lack of internationally competitive suppliers and related companies.

•

Business strategy, structure and competition. Conditions that determine how companies are created, organised and managed, as well as the nature of national competition.

These four attributes form the Porter's diamond. Its author argues that companies are more likely to succeed in economic sectors where diamondism is more favourable. He also explains that the diamond forms a system of reciprocal reinforcements. The effect of one attribute depends on the condition of others. For example, Porter argues that favourable demand conditions do not give rise to a competitive advantage unless companies have enough competitiveness to meet. Porter argues that the other two variables can affect national diamonds in many ways: coincided with events and government. Random events, such as major innovations, can change the profile of the industry and open one country's businesses to replace them. Government, when choosing its policies, stimulates or inhibits national interest. For example, different regulations change domestic demand conditions, anti-monopoly laws affect the intensity of competition in the economic sphere, and public investment in education changes the factor division. Authors Endowment Factoring is at the heart of the Heckscher-Ohlin theory. Porter did not postulate anything radically new but analyzed the characteristics of the production factors. It detects hierarchies between authors to distinguish b...