International-Business-Dr-R-Chandran-E-book

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International Business- Dr. R. Chandran
To understand the concept very clearly the international product life cycle
starts from the location where the products originates. The introduction stage
is marked by innovation. Innovation is an outcome of research and
development. According to product life cycle theory, the production location
for a specific product moves from one country to another at different stages.
Generally, the life cycle movement starts from advanced countries where
considerable amount is spent for research and development. Many occasions
failures may occur. Still they pursue innovation. Out of ten innovations, two
may be commercially viable for which they do not hesitate to spend money
other eight innovations.
1. Introductory Stage
New products are generally developed after observation of demand, utility
and benefits a group of a group of customers enjoy in a given market. It is a
normal practice that Japanese company develops a new product for Japanese
market first and US Company develops a product for US market first. The
Research and Development group creates a new product and predominantly
the company concentrates on the domestic market and gradually starts
export to other countries. By way of getting constant market feed back the
company modifies or alters or adds new features to match international
markets.
Importance of innovation and decision of locations
Over the past 50 years all the new products have been developed either in
US or in Europe or in Japan. The industrialized countries are having
advantage of research, technological infrastructure, and manpower.
Companies like Merck, Siemens, Sony, Honda motors, General motors,
Matsushita allotted huge funds for such development. Those companies are
capable of taking the risk on new product development in anticipation of
long term gainful results. Innovations are taking place in such companies on
continuous basis. Few companies concentrate more on technological
innovative products. Few companies are making improvements in the
existing products. Few companies modify methods of manufacturing and
process.
Even though the debate is going on that developing countries and less
developed countries have lacunae in research capabilities currently
innumerable innovations are taking place in developing and less developed
countries also. In future, the industrialized countries will locate innovation
centers or R&D intensive operations in developing countries.
Movement of labour and products
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