Question

According to raymond vernon''s international product life cycle theory, international diversification is preferable in order to answer choices avoid international trade regulations avoid domestic governmental taxation pressures enhance the product's life cycle all the above

Answer 1

Product development and adaptation are moreover not static concepts. They are dynamic because the global market itself is evolving over time. Due to this continuous evolution, products tend to become obsolete with the passage of time. Market for a product becomes saturated over a time horizon and unless new product designs and substantially improved versions are developed, sales and profitability will go down. For example, when black and white TV market was almost saturated, advent of color TV revived the market. Similarly, introduction of Hi-Fi products has created demand for broadcasting receivers and record players.

Conceptually, a product may be conceived of to pass through a typical life cycle – Market development, Market growth, Market maturity and Market decline. The four stages are shown.

During the market development stage, the product is new in the market and depending on its acceptability to the potential buyers the sales volume records a rise. In the succeeding stage of market growth, the market acceptability is attained and sales picks up rapidly. In the third stage of market maturity, the product tends to approach the saturation level and the rate of growth of sales slackens down. In the final stage of market decline, consumers lose interest in the product and sales decline precariously.