Global Business: Exploration and Evaluation of Culture and Economics
Emerging Economies and Globalization
B6512 Global Business: Exploration and Evaluation of Culture and Economics
Courtez Kirkwood
Argosy University
The Product Life Cycle Theory
In the mid-1960s, Raymond Vernon proposed a trade theory that is specific production in the US and expansion to global markets. Vernon believed that most of the world’s new products in 20th centuries were developed and sold by U.S firms. Vernon was a strong believer that products produced in the U.S could also be produced in low-cost locations across the world and exported back into the United States (Hill, 2002). Innovative firms felt it was best to keep production facilities within the U.S and close to the market. The Product Life Cycle Theory argues that with the growth of demand in the U.S, the demand in other countries is limited to those in the higher income bracket (Hill, 2002). The theory explains that with the demand being limited it makes it impossible for the product to shoot up the market in other countries. In other words, firms in other countries don’t feel it is worthwhile to produce the new product. This creates a need for exporting to those countries, which can drive the leading firm in the U.S to branch into other countries, depending on how well exporting does (Hill, 2002). The Product Life Cycle Theory aims to standardize products across the world. The theory explains the migration of mature industries out of the United States and into low-cost locations.
GEH and the Product Life Cycle Theory
In the Product Life Cycle Theory, the main argument is that U.S is responsible for most of products in the 20th century. General Electrics was founded in the United States in 1892 and has expanded to many other countries and continents since then. General Electrics has studied India’s market and feels that there is a lot of good talent at a much lower price in India. The Product Life Cycle Theory best explains GEH’s reasoning for expanding to
B6512 Global Business: Exploration and Evaluation of Culture and Economics
Courtez Kirkwood
Argosy University
The Product Life Cycle Theory
In the mid-1960s, Raymond Vernon proposed a trade theory that is specific production in the US and expansion to global markets. Vernon believed that most of the world’s new products in 20th centuries were developed and sold by U.S firms. Vernon was a strong believer that products produced in the U.S could also be produced in low-cost locations across the world and exported back into the United States (Hill, 2002). Innovative firms felt it was best to keep production facilities within the U.S and close to the market. The Product Life Cycle Theory argues that with the growth of demand in the U.S, the demand in other countries is limited to those in the higher income bracket (Hill, 2002). The theory explains that with the demand being limited it makes it impossible for the product to shoot up the market in other countries. In other words, firms in other countries don’t feel it is worthwhile to produce the new product. This creates a need for exporting to those countries, which can drive the leading firm in the U.S to branch into other countries, depending on how well exporting does (Hill, 2002). The Product Life Cycle Theory aims to standardize products across the world. The theory explains the migration of mature industries out of the United States and into low-cost locations.
GEH and the Product Life Cycle Theory
In the Product Life Cycle Theory, the main argument is that U.S is responsible for most of products in the 20th century. General Electrics was founded in the United States in 1892 and has expanded to many other countries and continents since then. General Electrics has studied India’s market and feels that there is a lot of good talent at a much lower price in India. The Product Life Cycle Theory best explains GEH’s reasoning for expanding to
References: GEH. (2014). Where We Work. GE Sustainability. Retrieved from http://www.gesustainability.com/where-we-work/india/ Hill, W.L C. (2002). International Business: Competing in the Global Marketplace. New York: McGraw-Hill College Layne, R. (2011). GE Moves 115-Year-Old X-Ray Unit’s Base to China to Tap Growth. Bloomberg. Retrieved from http://www.bloomberg.com/news/2011-07-25/ge-healthcare-moves-x-ray-base-to-china-no-job-cuts-planned.html McDermid, B. (2011). GE Moving top X-ray executives to China. Reuters. Retrieved from http://www.bloomberg.com/news/2011-07-25/ge-healthcare-moves-x-ray-base-to-china-no-job-cuts-planned.html Timmons, H. (2010). India Expands Role as Drug Producer. The New York Times. Retrieved from http://www.nytimes.com/2010/07/07/business/global/07indiadrug.html?pagewanted=all&_r=0