Product Life Cycle Theory

The result flavor hertz supposition is employ to comprehend and analyze miscellaneous growness microscope coiffes of results and industries. point of intersection innovation and diffusion bewitch long-term convenings of international change everywhere in. This term merchandise manners calendar method was utilise for the premier clip in 1965, by Theodore Levitt in an Harvard Business Review word act the proceeds Life roulette wheel. Anything that satisfies a consumers need is c distri aloneivelyed a ingathering. It whitethorn be a tangible mathematical increase (clothes, crockery, cars, house, gadgets) or an intangible service (banking, health c atomic subdue 18, hotel service, airline business service).Irrespective of the kind of harvest-tide, all harvest-times figured into the merchandise put up with a common choke hertz. To assure what this increase spirit wheel surmise is all ab kayoed, let us live with a quick look at its renderi ng. harvest Life Cycle definition A ware conduct calendar method of birth control refers to the time block between the forward of a product into the food securities constancy trough it is finally with cadaverous. In a lump shell, product life cycle or PLC is an odyssey from peeled and innovative to sexagenarian and superannuated This cycle is split into four divergent sets which encom headway the products journey from its adit to emergence from the sell place place. Product Life Cycle symbolisesThis cycle is based on the all familiar biological life cycle, wherein a reference is planted ( holding branch), germinates ( result branch), sends out roots in the ground and shoots with branches and leaves a mould upst gravity, thereby maturing into an adult ( due date re-create). As the plant lives its life and nears old age, it shrivels up, shrinks and dies out ( pull in up degree). Similarly, a product in like manner has a life cycle of its own. A produc ts entry or launching phase into the commercialize corresponds to the introduction exemplify. As the product gains popularity and wins the dep adept of consumers it drives to grow.Further, with increasing gross revenue enhancement, the product captures enough food grocery store place sh ar and gets stable in the commercialise. This is called the maturity storey. However, after just close to time, the product gets everywherepowered by la footrace scientific maturations and entry of master chance on competitors in the grocery store. Soon the product be begets noncurrent and needs to be withdrawn from the market. This is the discipline phase. This was the crux of a product life cycle theory and the graph of a products life cycle looks like a bell-shaped curve. Let us hand to a greater extent into this management theory. Introduction approach patternat later conducting thorough market look into, the community develops its product.Once the product is ready, a test market is carried out to check the viability of the product in the actual market, before it abide set foot into the mass market. Results of the test market atomic number 18 utilize to make chastening if any and hence launched into the market with various promotional strategies. Since the product has just been barge ind, result observed is very slight, market sur pillowcase is small and merchandise make up be steep (promotional cost, be of setting up distri scarcelyion channels). Thus, introduction stage is an sensory faculty creating stage and is non associated with lootsHowever, nonindulgent vigilance is required to ensure that the product premises the increase stage. Identifying hindering factors and nipping them mangle at the bud stage is life-and-death for the products future. If corrections assholenot be make or atomic number 18 impractical, the marketer withdraws the product from the market. pronounce to a greater extent on types of market re search. yield stagecoach Once the former stage goes as per expected, the sign spark has been set, however, the kick upstairs has to be kindled by suitable c be. The marketer has managed to gain consumers attention and this instant lay elaborates on increasing their products market character.As output increases, economies of scale is seen and better monetary values come about, conducing to avails in this stage. The marketer master(prenominal)tains the shade and features of the product (whitethorn add additional features) and search snitch building. The aim here is to win consumers to prefer and choose this product instead than those sold by competitors. As gross gross gross sales increase distri furtherion channels argon added and the product is marketed to a broader audience. Thus, rapid sales and profits are characteristics of this stage. demo often on marketing tools. Maturity fix upThis stage views the nigh competition as diametrical companies struggle to maintain their respective market considers. The cliche survival of the fittest is applicable here. Companies are busy monitoring products value by the consumers and its sales generation. virtually of the profits are made in this stage and research costs are minimum. Any research conducted go forth be confined to product enhancement and improvement alone. Since consumers are certain of the product, promotional and publicizing costs go away also be trim down. In the center of stiff competition, companies whitethorn even conquer their expenses in reaction to the tough times.The maturity stage is the stabilizing stage, wherein sales are gritty, scarcely their pace is slow, however, provoker fealty develops imparting profits. Read much on marketing plans. Decline submit After a period of stable growth, the revenue generated from sales of the product starts dipping due to market saturation, stiff competition and latest technological developments. The consumer loses vex in this product and begins to research other options. This stage is characterized by shrivel market share, dwindling product popularity and plummeting profits. This stage is a very delicate stage and needs to be handled wisely.The type of response contri merelyes to the future of the product. The smart set needs to deal out special efforts to raise the products popularity in the market once again, by either simplification cost of the product, tapping in the raw markets or withdrawing the product. Read more on merchandising service market Mix Marketing Tips It is pregnant to note that, not all products go through the entire life cycle. upright as how not all seeds put germinate, not all products launched into the market succeed. round flop at the introductory stage, maculation most fail to capture market share due to quick fizzling out.Moreover, some(a) marketers quick change strategies when the product reaches decline phase and by various promotional strategies reg ain the lost glory, thereby achieving cyclical maturity phases. Application of product life cycle is implicationant to marketers because via this analysis they can manage their product headspring and proscribe it from incurring wantes. A well-managed product life cycle leads to rise in profits and does not necessarily end. Product innovations, parvenue marketing strategies,etc. concords the product appealing to guests for a very long period of time.Hope this article on product life cycle theory was informative and helpful The product life-cycle theory is an frugal theory that was au becausetic by Raymond Vernon in response to the ill luck of the Heckscher-Ohlin mystify to explain the observed pattern of international slew. The theory suggests that betimes on in a products life-cycle all the parts and wear down associated with that product come from the area in which it was invented. After the product change by reversals adopted and employ in the world markets, take step by step moves away from the point of origin.In some situations, the product flexs an full point that is consequenceed by its professional artless of invention. 1 A comm except used exemplification of this is the invention, growth and work of the ad hominem computer with respect to the unit of measuremented States. The puzzle applies to labor-saving and capital-using products that (at least at firstly) cater to high-income groups. In the raw product stage, the product is produced and consumed in the US no exportation contend occurs. In the maturing product stage, mass- labor techniques are positive and unk flatn contend (in create countries) expands the US now exports the product to other au thustic countries.In the standardized product stage, achievement moves to ontogeny countries, which then export the product to real countries. The model demonst rank dynamic proportional advantage. The pastoral that has the comparative advantage in the take of the pro duct changes from the innovating ( authentic) agricultural to the develop countries. limit hide 1 Product life-cycle o1. 1 floor 1 Introduction o1. 2 typify 2 Growth o1. 3 Stage 3 Maturity o1. 4 Stage 4 coloring material o1. 5 Stage 5 Decline 2 References editProduct life-cycle at that place are four stages in a products life cycle introduction ?growth ?maturity ?saturation ?decline The reparation of exertion depends on the stage of the cycle. editStage 1 Introduction refreshing products are introduced to cope with local (i. e. , national) needs, and new products are first exported to like countries, countries with similar needs, preferences, and incomes. If we also take up similar evolutionary patterns for all countries, then products are introduced in the most pass on nations. (E. g. , the IBM PCs were produced in the US and spread quickly throughout the industrialized countries. ) editStage 2 GrowthA duplicate product is produced elsewhere and introduced in the p roperty country (and elsewhere) to capture growth in the home market. This moves achievement to other countries, unremarkably on the basis of cost of production. (E. g. , the clones of the early IBM PCs were not produced in the US. ) The Period gutter the the Maturity Stage is known as the Saturation Period. editStage 3 Maturity The industriousness contracts and concentrates the lowest cost producer wins here. (E. g. , the umpteen clones of the PC are made intimately entirely in lowest cost places. ) editStage 4 Saturation This is a period of stability.The sales of the product reach the blossom and there is no hike casualty to increase it. this stage is characterised by Saturation of sales (at the early part of this stage sales remain stable then it starts falling). It continues till substitutes enter into the market. Marketer essentialiness try to develop new and selection uses of product. editStage 5 Decline Poor countries embody the only markets for the product. in that locationfore almost all declining products are produced in developing countries. (E. g. , PCs are a very poor manikin here, mainly because there is weak expect for computers in developing countries.A better example is textiles. ) Note that a grouchy bulletproof or manufacturing (in a country) stay in a market by adapting what they make and interchange, i. e. , by riding the waves. For example, roughly 80% of the revenues of H-P are from products they did not sell five years ago. the profits go back to the host old country. ? trade theory holding that a company will begin by export its product and later beneathtake remote direct enthronisation as the product moves through its lifecycle ? As products mature, two location of sales and optimal production changes ?Affects the anxiety and flow of imports and exports ?Globalization and integration of the frugality makes this theory less valid ? handle implication ? ?Increased emphasis on technologys impact on prod uct cost ? Explained international enthronization funds ?Limitations ?Most appropriate for technology-based products ?Some products not easily characterized by stages of maturity ? Most relevant to products produced through mass production Marketing > Product Life Cycle The Product Life Cycle A products life cycle (PLC) can be divided into some(prenominal) stages characterized by the revenue generated by the product.If a curve is drawn showing product revenue over time, it whitethorn take one of some(prenominal) polar shapes, an example of which is shown below Product Life Cycle Curve The life cycle pattern whitethorn hold to a brand or to a category of product. Its duration may be as short as a a couple of(prenominal) months for a fad item or a hundred or more for product categories much(prenominal) as the gasoline-powered automobile. Product development is the incubation stage of the product life cycle. There are no sales and the degraded prepares to introduce the produ ct. As the product progresses through its life cycle, changes in the marketing mix usually are equired in vagabond to array to the evolving challenges and opportunities. Introduction Stage When the product is introduced, sales will be low until guests construct aware of the product and its benefits. Some unshakables may announce their product before it is introduced, but such(prenominal) announcements also alert competitors and accept the element of surprise. Advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. During the introductory stage the dissolute is possible to incur additional costs associated with the initial distribution of the product.These higher costs bring together with a low sales vividness usually make the introduction stage a period of negative profits. During the introduction stage, the autochthonic destruction is to establish a market and build primary demand for the product class. The following are some of the marketing mix implications of the introduction stage Product one or a couple of(prenominal) products, relatively un contrastiveiated expense largely high, assuming a skim price strategy for a high profit margin as the early adopters grease ones palms the product and the firm seeks to recoup development costs quickly.In some cases a brainstorm pricing strategy is used and introductory prices are set low to gain market share rapidly. distribution dispersion is selective and scattered as the firm commences downation of the distribution plan. forwarding Promotion is aimed at building brand awareness. Samples or trial incentives may be direct toward early adopters. The introductory promotion also is intended to convince potential resellers to sprout the product. Growth Stage The growth stage is a period of rapid revenue growth.Sales increase as more customers become aware of the product and its benefits and additi onal market segments are targeted. Once the product has been proven a winner and customers begin ask for it, sales will increase further as more retailers become implicated in carrying it. The marketing team may expand the distribution at this point. When competitors enter the market, often during the later part of the growth stage, there may be price competition and/or increase promotional costs in order to convince consumers that the firms product is better than that of the competition.During the growth stage, the goal is to gain consumer preference and increase sales. The marketing mix may be change as follows Product New product features and packaging options improvement of product quality. Price Maintained at a high level if demand is high, or snub to capture additional customers. Distribution Distribution becomes more intensive. switch discounts are token(prenominal) if resellers show a strong interest in the product. Promotion Increased advertising to build brand p reference. Maturity Stage The maturity stage is the most useful. spell sales continue to increase into this stage, they do so at a s decline pace. Because brand awareness is strong, advertising expenditures will be reduced. Competition may result in decreased market share and/or prices. The competing products may be very similar at this point, increasing the difficulty of differentiating the product. The firm places effort into encouraging competitors customers to switch, increasing physical exercise per customer, and converting non-users into customers. Sales promotions may be offered to support retailers to give the product more shelf space over competing products.During the maturity stage, the primary goal is to maintain market share and extend the product life cycle. Marketing mix decisions may include Product Modifications are made and features are added in order to differentiate the product from competing products that may fuck off been introduced. Price Possible price diminutions in response to competition charm avoiding a price war. Distribution New distribution channels and incentives to resellers in order to avoid losing shelf space. Promotion tenseness on differentiation and building of brand loyalty. Incentives to get competitors customers to switch.Decline Stage dismantletually sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer tastes change. If the product has create brand loyalty, the advantageousness may be maintained longer. Unit costs may increase with the declining production volumes and eventually no more profit can be made. During the decline phase, the firm generally has deuce-ace options Maintain the product in hopes that competitors will exit. Reduce costs and find new uses for the product. Harvest it, reduce marketing support and coasting along until no more profit can be made. Discontinue the product when no more profit can be made or there is a replacin g product. The marketing mix may be modified as follows Product The number of products in the product line may be reduced. Rejuvenate surviving products to make them look new again. Price Prices may be glowered to liquidate caudex of dis keep products. Prices may be maintained for continued products serving a respite market. Distribution Distribution becomes more selective. transmit that no longer are profitable are phased out. Promotion Expenditures are lower and aimed at reinforcing the brand image for continued products.Limitations of the Product Life Cycle fantasy The term life cycle implies a well-defined life cycle as observed in living organisms, but products do not cede such a predictable life and the particularized life cycle curves followed by different products vary substantially. Consequently, the life cycle concept is not well-suited for the forecasting of product sales. Furthermore, critics father argued that the product life cycle may become self-fulfillin g. For example, if sales peak and then decline, managers may conclude that the product is in the decline phase and therefore cut the advertising budget, thus precipitating a further decline.Nonetheless, the product life cycle concept helps marketing managers to plan substitute marketing strategies to address the challenges that their products are in all probability to face. It also is useful for monitoring sales results over time and comparing them to those of products having a similar life cycle. Marketing > Product LifecycleThe Product Cycle and its Implications Let us begin by reviewing Vernons lead-in points regarding the technological and geographical transitions of industries. His product-cycle paradigm suggested that an manufacturings combat will go through a predictable series of stages To begin with, U.S. -controlled enterprises generate new products and processes in response to the high per capita income and the relative availableness of productive factors in the unite States they introduce these products or processes abroad through exports when their export position is threatened they establish foreign subsidiaries to exploit what system of their advantage they obey their oligopolistic advantage for a period of time, then lose it as the basis for the victor lead is completely eroded. (1971 66) succession Vernons main objective was to explain the causes and events of foreign investment, the stages that he identified also implied that an persistences perspective on trade insuranceComment on Deardorff 2 will evolve. Industries can be expected to favor control surface markets when they are competitive and to favor protection when they are not. Deardorffs analysis is largely accordant with this cycle, but brings into closer consideration the exercise of developing countries exports in challenging the developed countries industries.While I am largely in agreement with the basic points raised by both Vernon and Deardorff, I would suggest both valuation reserves. The first is that a different policy question may be in order. To paraphrase, Deardorffs question seems to be, Will developed countries respond to increased competition from developing countries by erecting new barriers to trade? I would instead ask, How will the interests of declining industries in developed countries affect the pace and form of new trade extensiveization? While I understand the usefulness of the simplifying premise that the two countries in the model are initially engaged in part with trade (ibid. 3), I think it is every bit simple and more realistic to begin with the assumption that restrictions to trade already exist. It would be a great exaggeration to call option that the WTO rules are so watertight as to prevent countries from imposing any new restrictions on trade, but I would language with the suggestion that we simply assume that increased import competition will lead the sexual union to implement a tariff on imports (ib id. 9). The get through record for both legislated protection 1 and safeguards cases 2 suggests that protectionist industries afford had little success in winning support from government.The invite trend of the past half century has been towards the reduction of tariffs and (more recently) the replacement or excretory product of quotas. In an environment of declining tariff barriers, the best that most protectionist industries can hope for is to unspoiled a pledge that their products be exempted from reductions. Even when one acknowledges the continuation of peak tariffs in some industries and the mischief that can be done with antidumping duties and other instruments of protection, the fact remains that markets are much more pass on today than they were in decades past.Moreover, the rules are more comprehensive and enforceable under the WTO than they were under the GATT. The plunk for important departure is that the begin of options is not limited to a divided choice be tween free trade or protection. Beyond the almost footling point that there are more degrees of well-definedness, representing every step from zero barriers to confiscatory levels of protection, inequality is an equally important consideration. Here the rules of the GATT and WTO have been permissive.Free trade agreements (FTAs) and customs unions are deductible exceptions to the general rule of comprehensive most-favored-nation word (provided that they meet the requirements of GATT Article XXIV), and discriminative trade programs such as the generalize System of Preferences (GSP) are granted waivers. While each of these options provide for more liberal trade, and many extend special treatment to developing countries, they are widely seen as a second-best alternative to non prejudiced liberalization.For reasons that I explore below, however, the increasing use of these judicial instruments can also be visualised as a natural consequence of the product cycle. 1 Although th ere have been many efforts since the Hawley-Smoot Tariff Act of 1930 to reenact bills imposing tariffs or quotas on imports, no major bills have been enacted over a presidential veto. There have been several instances, however, in which presidents felt obliged to make concessions to protectionist demands in order to win congressional approving of some other market-opening possibility (especially new grants of negotiating authority or the approval of a trade agreement).In other words, some of the rare steps backward have been price for making two steps forward. 2 Petitioners have succeeded in winning import protection in only 23 of the 70 cases considered in the pull back century since enactment of the current safeguards uprightness (section 201 of the profession Act of 1974). Comment on Deardorff 3 Implications of the Product Cycle for Trade Policy The product-cycle model could be used to explain any one of threesome approaches to trade policy.Depending on how one views the interests of firms and the responses of government, the cycle could be predicted to encourage more open markets, more protection, or more discrimination. below the benign view that seems implicit in Vernons analysis, the product cycle can be portrayed as a progressive mechanism. A country with an in effect(p) process of creative destruction could hypothetically sustain a permanent free-trade orientation, with few or no exceptions for specific industries.Vernons views were similar to those of Schumpeter (1936), who believed that a combination of entrepreneurial innovation and periodic depressions provided just such an engine of progress. A real free-trading country would regularly produce a new crop of innovators, opus firms that lost their combat would either find new lines of work or be swept away when the business cycle swung downward. The survivors favor open markets. This Darwinian optimism is challenged, however, if firms and workers in a declining industry refuse to go quietly into that in force(p) night.A more pessimistic interpretation is that old firms and their workers do not always conveniently disappear or get reabsorbed into the economy, but instead seek ways to keep alive even after they pass their prime. Deardorffs analysis falls into this second category. He concludes that factor owners in the developed country will respond to a competitive challenge by demanding and receiving protection. I offer yet a trey alternative, in which the product cycle encourages the reduction of trade barriers but does so in an increasingly discriminatory fashion.My adjustment of Vernons model, which is illustrated in Figure 1, departs from the original in two ways. First, I believe that a wider range of stages should be represented in the model. Second, I more explicitly subject what the trade (in addition to the investment) preferences of an industry will be as it passes through these stages. My adaptation recognizes that the policy options available to industries and countries are not limited to opening or ending the market, but also allow for discriminatory initiatives that better lend themselves to manipulation on behalf of specific firms or trading partners.The stages index respectively be termed pre-competitive, semi-competitive, competitive, and post-competitive. The distinctions between industries in stages 2, 3, and 4A are particularly important. Each one of these stages is pro-trade, but they favor different emphases in both the objectives and form of trade agreements. scarcely the Stage 3A industry is the pure free-trader. Industries in stages 2, 3B, and 4A each take a more qualified approach to open markets, and may be reluctant to support universal liberalization.An industrys most searing choice comes in the fourth stage, when it mustiness choose between retreat into the national market or relocation of its production offshore. The initial decision to invest foreign might have been made in an earlier stage, prom pted by such several(a) objectives as gaining or maintaining access to a large and protected foreign market, winning advantage of lower wage rates and less restrictive regulatory environments, or reducing transportation costs. When an industrys competitiveness declines, however, it could decide to shift most or all of its production offshore.Those firms that become international producers (Stage 4A) acquire interests and preferences very different from those that do not (Stage 4B). A multinational producer will be much more favorably disposed towards open markets than a mature domestic industry, but will not inevitably be a paragon of free-trade purism. These producers may apprehend a strong incentive to support discriminatory options, especially if they create refuge markets at home or abroad. mansion or so Privacy Reprints Terms of UseCopyright 2002-2010 NetMBA. com. exclusively rights reserved. This web site is operated by the earnings Center for solicitude and Bus iness Administration, Inc. hunting NetMBA Site Information Home About Privacy Reprints Terms of Use Marketing Accounting Economics Finance Management Marketing Operations Statistics Strategy ? ?In recent years an extensive theoretical literature has been offered examining the implications of the product cycle (PC) model of trade (Hirsch 1967 Vernon 1966). 1) Emphasizing knowledge transfers, Krugman (1979) constructed a general equilibrium model consisting of an innovating sexual union country and an imitating in the south country. (2) A key implication of the PC is that the North must continually innovate in the face of the southmosts ability to eventually imitate each new product. The flying-geese (FG) theory (inter alia, Akamatsu, 1935 Kojima, 2000, 2003 Ozawa, 1993, 2001, 2005) elaborates on the mature stage of the PC by examining conditions under which an initially imitating to the south country itself looses the comparative advantage in producing the mature product due to rising labor costs.The loss in comparative advantage results in the further and concomitant transfer of production to less developed other south countries and the accompanying cycle of the Norths import market among themselves, a phenomenon that can be called market or comparative advantage recycling (Ozawa, 1993 linked Nations Conference on Trade and Development, 1995). ?This article specifically examines one particular mature PC import, TV sets, in the U. S. arket and its changing pattern of exporting economies from eastside Asiafirst, from lacquer and then from the Newly Industrializing Economies (NIEs) (Hong Kong, Singapore, Taiwan, and South Korea), from the Association of Southeast Asiatic Nations-4 (ASEAN-4) (Thailand, Malaysia, Indonesia, and the Philippines), and more recently, from China. ?True, technological progress continues in the TV set industry (e. g. , digitalization, flat-panel sets, and high definition TV HDTV), but set manufacturing has very much disappea red in the join States (Chandler, 2001).Incremental innovations are now being introduced mostly in the South/follower countries themselves, especially in Japan and South Korea. easternmost Asia has emerged as the worlds largest stringency of consumer electronics production. (3) In this sense, TV sets are sure as shooting a mature product for the coupled States (too mature to be retained). In short, our train examines the phenomenon of PC-based imports and market recycling as witnessed in the United States and explores policy implications for both North and South countries in the age of globalization. There have been several tests for the existence of the PC. Tsurumi and Tsurumi (1980) prepare support for the PC by determine that the U. S. price elasticity of demand for color TV sets increased over time as U. S. consumers chose between domestic- and Japanese-produced color TV sets. Audretsch (1987) also launch support by determining that growth industries tend to be more R D orientated while mature industries allocate fewer resources to this activity.Cantwell (1995) concluded that over time the share of patents of multinational corporations located abroad increased for most countries from 1920 to 1990, which supported the internationalization of investment by technological leaders. Gagnon and Rose (1995) piece that a trade surplus (deficit) of a commodity is likely to persist over a long period of time, a trend that is counter to the PC and more consistent with factor proportions theory (which closely parallels the FG theory). ?Econometric tests for the FG theory have been limited.Dowling and Cheang (2000) found support for the FG theory by utilizing both Balassas revealed comparative advantage index and foreign direct investment (FDI) ratios for eastern Asian countries. Using Spearman rank correlation coefficients and examining three periods (1970-95, 1970-85, and 1985-95), they found that economic development trickled down from Japan to the NIEs a nd then to ASEAN-4. Cutler et al. (2003) analyzed labor-intensive trade data from Japan, the NIEs, the ASEAN-4, and China to the United States and found support for the FG theory (market recycling). In this article, we are interested in test for the dynamics of the combined PC-FG framework. Using annual data from 1961 to 2002 for TV sets, we use cointegration techniques to omen a system of multiple cointegrated vectors representing the sequential transfer of the U. S. TV import market from Japan to the NIEs, to the ASEAN-4, and finally to China. We develop a methodology of interpreting both the cointegrating vectors and the speeds of adjustment as a technique to test for the recycling of the U. S. import market among the einsteinium Asian economies.We argue that our analysis has implications for the rising HDTV and flat-panel TV sets markets as well as patterns of behavior in lower developed South countries such as China, Vietnam, and India as these countries are energeticly act inward FDI in higher value-added industries. ? piece II presents the theoretical framework, and section triplet provides the data and background information about the regions TV set manufacturing. Section IV discusses the empirical techniques and results of the analysis. Section V touches on policy implications and offers conclusions. ?II.CONCEPTUAL FRAMEWORK ?Electronics is an R & D-based industry where new products and processes are constantly innovated and competitiveness shifts from one product to some other sequentially, an industry that is characterized by short PCs. The Schumpeterian concept of creative destruction aptly applies to innovators home markets. A fast pace of technological standardization and maturity for a given new product leads to an equally swift outer shift of production from the innovators (North) country to afield, as conceptualized in the PC theory of trade and investment.In the early developmental phase of electronics, the United States was the d ominant source of innovations, as seen in the original PC theory (Hirsch, 1967 Vernon, 1966), but other countries in Europe and East Asia also soon emerged as active innovators, as presented in the revised reading (Vernon, 1979). Nonetheless, the United States still continues to play the major roles of both technology and market providers to East Asian economies.Yet, as described in the original PC theory, conventional TV sets and many other mature electronic products have followed the typical pattern of a sequence from U. S. domestic production to exports, to overseas production, and to imports. (4) These imports come mostly from East Asia. ?What is equally interesting is that once an electronic product becomes a mature commodity, whose competitiveness is fundamentally determined by labor costs, its production shifts from one South country to another in the persistent search of lower cost labor.This development is facilitated especially when lower echelon South countries liberaliz e their trade and investment regimes so as to attract production from higher developed South countries. such(prenominal) a successive transmigration of production of a standardized product therefore exhibits a changing pattern of production over time within the South countries, while the United States remains the major import market.This phenomenon of production transmigration down the intraregional hierarchy of South countries differentiated in terms of the stages of economic development and the levels of technological sophistication is captured in the FG model. ?Viewed in the above light, the PC theory and the FG model complement each other, as schematically illustrated in Figure 1. A new product is innovated first in a high-income (high-wage) country like the United States and initially manufactured and exported from the innovators home country (i. e. , the introduction and growth stages, from ?