International

Product Life Cycle

Dr M Manjunath Shettigar,
Christ University, Bangalore

provenmodels

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.
prov enmodels

list of innovations
innovating country

United States

Germany

Japan

innovation

market stimulant

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

synthetic fertiliser

scarcity of fertile land

synthetic dyestuffs

guaranteed military demand

ethical drugs

subsidised universal medical care

rayon

scarcity of raw materials

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.
prov enmodels

three stages from the initiating countrys viewpoint

international product life cycle
product stage

1 new

2 mature

standardisation

trade

target market

competitors

production
cost locally

limited;
production for
home market

USA / inventors
country

few local firms

initially high

increasing
exports

USA, advanced
and later
developing
markets

competitors from
advanced
markets

declining due to
economies of
scale

competitors from
mostly
developing
markets

increase owing
to lower
economies of
scale and
comparative
disadvantages

declining export
at first; later in
phase become
imports

USA / inventors
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.
prov enmodels