5 Compare the product life cycle theory with the Hecksher Ohlin theory?

Answer 1

The typical pattern of a product is represented by a curve divided into four distinct phases: introduction, growth, maturity, and decline. The Product life cycle (PLC) is to maximize the product's value and profitability at each stage. in introductory phase, sales are slow. the strategy is to create widespread awareness.Costs are incurred in building distribution ans increasing awarenessthrough heavy promotion. It is hoped that the investments made in new products introduction pay off and the product or service moves to the growth phase. The firm may either build market share or profitability in thr growth phase. Strategies here are to make differential changes that add value to the product and to target new market. Marketing moves away from promotion through personal selling towards more mass advertising .the firm attempts to stay in the growth stage as long as possible. Sales growth slows at maturity ans the firm moves to defend market position . This is where marketing managers must pay the most attention.Promotion cost increase significantly. cost reduction is crucial as competitiors begin to lower prices and introduce improved versions of the product. with the lower prices come lower profit, and competitors begin to drop out. This is typically long lasting stage, with some market leaders holding there position over several decades. The final stage is decline. Here the firm may cintinue to market the product hoping that competitors will discontinue their products. Other strategies are to maximize profit by eliminating as many product costs as possible as sales slow, or else to eliminate the product altogether. The heckscher-ohlin Trade Model was first conceived by two swedish economists, Eli Heckscher (1919) and Bertil Ohlin. There are four major component of the HO model:- 1. Factor Price EqualizationTheorem 2. Stolper-Samuelson theorem 3. Rybczynski Theorem 4. Heckscher- ohlin trade theorem Among the four main results of the result of HO theory, FPE is the most fregile theorem. if any of the eight assumptions are violated, it will not hold. Assumptions:- 1 no barriers to trade - World trade is assumed to be free from any impediments, such as tariffs, quotas, voluntary export restraints and exchange contrl. 2. No transportation cost- After industrial revolution in the mid 1800s major cities were connected by railroads, reducing the transportation costs further. 3. Perfect competition (PC) +Full Empoyment ( FE) PC Prevails in both products and factors markets. this assumption rules out monopolistic and oligopolistic market structure. 4. Factors are mobile in each country but are immobile across national borders 5. No specialization 6. Production function exhibit constan retusns to scales (CRS)and differ among industries 7. Indentical technology between trading countries 8. No Factors intensity reversal Abhishek kumar dated 15.04.2009 The typical pattern of a product is represented by a curve divided into four distinct phases: introduction, growth, maturity, and decline. The Product life cycle (PLC) is to maximize the product's value and profitability at each stage. in introductory phase, sales are slow. the strategy is to create widespread awareness.Costs are incurred in building distribution ans increasing awarenessthrough heavy promotion. It is hoped that the investments made in new products introduction pay off and the product or service moves to the growth phase. The firm may either build market share or profitability in thr growth phase. Strategies here are to make differential changes that add value to the product and to target new market. Marketing moves away from promotion through personal selling towards more mass advertising .the firm attempts to stay in the growth stage as long as possible. Sales growth slows at maturity ans the firm moves to defend market position . This is where marketing managers must pay the most attention.Promotion cost increase significantly. cost reduction is crucial as competitiors begin to lower prices and introduce improved versions of the product. with the lower prices come lower profit, and competitors begin to drop out. This is typically long lasting stage, with some market leaders holding there position over several decades. The final stage is decline. Here the firm may cintinue to market the product hoping that competitors will discontinue their products. Other strategies are to maximize profit by eliminating as many product costs as possible as sales slow, or else to eliminate the product altogether. The heckscher-ohlin Trade Model was first conceived by two swedish economists, Eli Heckscher (1919) and Bertil Ohlin. There are four major component of the HO model:- 1. Factor Price EqualizationTheorem 2. Stolper-Samuelson theorem 3. Rybczynski Theorem 4. Heckscher- ohlin trade theorem Among the four main results of the result of HO theory, FPE is the most fregile theorem. if any of the eight assumptions are violated, it will not hold. Assumptions:- 1 no barriers to trade - World trade is assumed to be free from any impediments, such as tariffs, quotas, voluntary export restraints and exchange contrl. 2. No transportation cost- After industrial revolution in the mid 1800s major cities were connected by railroads, reducing the transportation costs further. 3. Perfect competition (PC) +Full Empoyment ( FE) PC Prevails in both products and factors markets. this assumption rules out monopolistic and oligopolistic market structure. 4. Factors are mobile in each country but are immobile across national borders 5. No specialization 6. Production function exhibit constan retusns to scales (CRS)and differ among industries 7. Indentical technology between trading countries 8. No Factors intensity reversal