Topic > Advantages of Product Life Cycle Theory - 1673

There are mainly three scenarios where the PLC model deviates from the norm in international product trade. As already discussed, tariffs and transportation costs can have a substantial effect on the growth of export/import markets. These types of trade barriers can be employed as a means to enforce international trade or as protectionist measures that discourage trade. As a result, high tariffs and high transportation costs discourage trade, while low tariffs and transportation costs encourage it. Countries that use protectionist measures typically see much more competition in their home markets from the start. Likewise, the effect of economies of scale largely influences how quickly foreign producers are able to compete. In industries that do not benefit strongly from economies of scale, small manufacturing facilities are able to produce as well as large manufacturing facilities; the advantage given to the original producer's country is nullified, consequently leading foreign producers to enter the market first and lower prices, at home and abroad, sooner. Therefore, products that are able to compete on price first typically observe a significantly shorter cycle that may even skip some stages altogether. Faced with this shortening of the cycle are high-income products, which are constantly subjected to a process of decline