Product Life Cycle in International Business

This assignment examines Raymond Vernon's Product Life Cycle theory, outlining its stages (Introduction, Growth, Maturity, Decline) and how they apply to businesses expanding internationally. Using Hilton Hotels as an example, it analyzes each stage's implications for investment, production, marketing, and innovation within the global marketplace.

STRATEGIC GROUPS AND INTERNATIONAL
BUSINESS
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TABLE OF CONTENTS
PRODUCT LIFE CYCLE BY RAYMOND VERNON...............................................................................3
REFERENCES.....................................................................................................................................4
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PRODUCT LIFE CYCLE BY RAYMOND VERNON
Product Life Cycle is an Economic theory which was developed to explain the pattern of
international trade. The theory is useful in suggesting that all the parts of the products and
associated people come from the area in which it was invented (Yue and et.al., 2016).
Afterwards, when it is adopted by the world markets, then the level of production gradually
moves away from the exact point of origin. The model could be applied in the organizations who
wishes to enter into international expansion or who carries products in different market places.
For instance- this could be applied to Hotel Hilton at the time when the hotel enters in Australian
market place.
 Introduction stage: When Hilton develops products successfully in the national market, it
could be then entered in the international market through new outlet. In order to create
demand, Hilton needs to make investment according to consumer preferences.
 Growth stage: At this stage, demand for Hilton’s services can enhance sales. Thus, as a
result the cost of production could be decreased and high profits can be generated. The
brand of Hilton may become widely known which can also generate profits for the
business organization (Mulder, 2014).
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 Maturity stage: In the maturity stage of PLC, the product becomes populous among
customers even in intensive competitive market. Thus, this might decrease the prices of
Hilton’s services and as a result, profit level might decline to a level. Thus, Hilton would
have to start looking towards other opportunities as well so that product line can be
extended. At this stage, consumers could be encouraged to replace their current product
with the new one. Marketing and promotion costs of Hilton hotel could be very high in
this stage.
 Decline stage: According to generalised concept, the market becomes saturated and the
product is no longer demanded by the customers (Wang, 2016). This stage can occur as a
natural result; however it could be stimulated by the introduction of new and innovative
products. Thus, after reaching towards this stage, Hilton hotel is required to bring new
and innovative products at the market place so that the existing customers could be
retained with the business. At this stage, generally sales decline; however even after that
Hilton hotel needs to offer the product as loyal service entity. This will also assist in
meeting needs of potential clients.
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REFERENCES
Mulder, P., 2014. Product Life Cycle Stages. [Online]. Available through:
<http://www.toolshero.com/marketing/product-life-cycle-stages/>. [Accessed on 22nd
February 2017].
Wang, W. P., 2016. Innovation Is the New Competition: Product Portfolio Choices with Product
Life Cycles.
Yue, L. and et.al., 2016. Product life cycle based demand forecasting by using artificial bee
colony algorithm optimized two-stage polynomial fitting. Journal of Intelligent & Fuzzy
Systems. 31(2). pp.825-836.
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