Describe the product cycle, including addressing the various inputs th

Describe the product cycle, including addressing the various inputs that are required over time and the resulting production location decisions.

What will be an ideal response?

ANSWER

Manufactured products go through a product cycle in which inputs change over time. The early phase is characterized by experimentation in both the product and the manufacturing process used to produce it. Sophisticated marketing and consumer feedback mechanisms are some of the inputs needed that necessitate manufacturing being near a high-income market. Experimentation and improvement in design and manufacturing require scientific and engineering inputs and capital that is willing to risk failure and some periods of little or no profits. As time passes, the product becomes standardized in size, features, and the manufacturing process. Production begins to shift to countries with low labor costs as manufacturing routines are standardized, assembly line type operations. In the early stage, opportunity costs are lowest in high-income countries because of their unique resource endowments. In the later stages, opportunity costs are lower in low wage countries as the factors of production in the manufacturing process shift to being more labor intensive.