Yanko Petrov, CEO of a Bulgarian based dairy products manufactuer is gathering information to consider foreign direct investment and a location for their new product. Since this is a new product (special kind of feta cheese) and is not being sold anywhere, I would recommend following the international product life cycle theory.
The international product life cycle theory constitutes 3 different stages for a “brand new product”. The first stage is “new product”, which recommends that the product is produced in the home country. Yanko has several advantages in doing this because he already has a dairy manfacturering plant Bulgaria. Keeping the intial product manufactuerering close to home will the research and development departments to readily availble receiving sample products. Yanko also appears to have experience in producing other dairy products milk, yogurt, cheese, etc. ) which gives him an advantage.
Next, the maturing product stage is when the product is monitored for the highest demanding area. Normally, a production facility is built in this country to meet the demanding needs of the product whichs prepares the company to reduce production cost. It is always wise to find a country that can produce the product at the lowest possible cost. Finally, the standardized product stage allows for the product to compete locally or globally. This is one of the most important stages of the international lifecycle.
How does a firm's pricing policy relate to the product's life cycle? When a company launches a new product, it knows the product won't last forever. However, the company does expect to earn a satisfactory profit to cover all the effort and risk that went into launching it. A firm can never accurately predict the lifetime of a product, but the lifetime involves four distinct stages. These four ...
Many companies create great products but are unable to compete and maintain high profit margins which eventually causes a company to fail in that product.