VERNONS INTERNATIONAL PLC THEORY

BY: PREETI THACKUR MMS- 3rd SEM MARKETING

STAGES OF IPLC
1. NEW PRODUCT:

COMPANY OF A DEVELOPED COUNRTY LAUNCHES A NEW PRODUCT IN HOME MARKET EASY ACCESS TO CAPITAL MARKET MINIMUM RISK & UNCERTAINITY COMPETITION FROM LOCAL & DOMESTIC PLAYERS

STAGES OF PLC CONTD

2.

MATURING PRODUCT:

EXPORTS INCREASES THROUGH TIME; ECONOMICALLY POSSIBLE TO START LOCAL PRODUCTION FDI DRIVES DOWN UNIT COST; LABOUR & TRANSPORTATION COST DECREASES OFFSHORE PRODUCTION FACILITY SERVES THE LOCAL MARKETS THAT SUBSTITUTES EXPORTS FROM HOME MARKET

STAGES OF PLC CONTD

3.

STANDARDISED PRODUCT:

MARKETS ARE SATURATED; FIRM FOCUSES ON REDUCING THE PROCESS COST TO COUNTER PRICE COMPETITION AND TRADE BARRIERS, PRODUCTION FACILITIES WILL RELOCATE TO COUNTRIES WITH LOWER INCOMES LOCAL COMPETITORS WILL GET ACCESS TO FIRST HAND INFORMATION AND CAN START TO COPY AND SELL THE PRODUCT

DEMAND OF THE ORIGINAL PRODUCT IN THE DOMESTIC COUNTRY DWINDLES FROM THE ARRIVAL OF NEW TECHNOLOGIES MARKET IS SHARED BETWEEN COMPETITORS WHO ARE PREDOMINATELY FOREIGN. THE DOMESTIC MARKET WILL HAVE TO IMPORT RELATIVELY CAPITAL INTENSIVE PRODUCTS FROM LOW INCOME COUNTRIES.

PROS & CONS

PROS
HELPS ORGANISATIONS THAT ARE BEGINNING THEIR INTERNATIONAL EXPANSION BY EXPLAINING HOW THE COMPETITIVE PLAYGROUND CHANGES OVER TIME AND HOW THEIR INTERNAL WORKINGS NEED TO BE REFITTED

CONS
THE RELATIVE SIMPLICITY OF THE MODEL MAKES IT DIFFICULT TO USE AS A PREDICTIVE MODEL THAT CAN HELP ANTICIPATE CHANGES. IT IS DIFFICULT TO DETERMINE THE PHASE OF A PRODUCT IN PRODUCT LIFE CYCLES.