H-O theory and Product Life Cycle
Indonesian as a developing county, that have a abundant resources. But, Indonesian as a developing country do not have technology to support for processing resources. Mostly, Indonesian resources are managed by foreigners. As we see, U.S that have technology, managing Indonesia resources and take the resources to their country. Here we can see, that US have specialization in technology, so the US export the technology to other country because that's their specialization. it's one the example of H-O theory.
So, What is H-O theory? H-O theory said Comparative advantage arises from differences in national factor endowments (land, capital, labour) rather than productivity. H-O theory created by Eli Heckscher (1919) and Bertil Ohlin (1933). They laid the groundwork for substantial developments in the theory of international trade by focusing on the relationships between the composition of countries’ factor endowments and commodity trade patternsas well as the consequences of free trade forthe functional distribution of income within countries. The Conclusion is H-O theory states that countries export those commodities which require, for their production, relatively intensive use of those productive factors found locally in relative abundance. http://www.econ.rochester.edu/people/jones/Palgrave_Jones_on_Heckscher_Ohlin.pdf
So, if we see, Indonesia have so many population that created so many labour that Indonesia have. If we see from national factor endowments, Indonesia have excellence in labour. We always see in television, there's so many our labour that sent to other country, like Malaysia, Philippines, Vietnam and Saudi Arabia. Because our labour is abundant. So, we export the labour to other country. Because in technology, we are scarce on that. We always used technology from other country. Like U.S always export technology because they abundant on that. U.S also have the capital, if we see U.S build so many corporation in many country around the world. Because we can say, a country that have advanced technology, that can rule the world. So, Indonesia export labour commodities and import capital commodities.
What is the Product Life-Cycle Theory? The theory of a product life cycle was first introduced in the 1950s to explain the expected life cycle of a typical product from design to obsolescence, a period divided into the phases of product introduction, product growth, maturity, and decline. The goal of managing a product's life cycle is to maximize its value and profitability at each stage. Life cycle is primarily associated with marketing theory. http://www.inc.com/encyclopedia/product-life-cycle.html
Thera are four stages in Product Life-Cycle Theory: first, Products introduction. Second, Growth. Third, Maturity and fourth, Decline.
I will choose one Industry, like Apple. In first stage, the company still promoted their products. They promote their products into public so that people know about their products. In this cases, the company don't get any profit from the market. Because they still promoted their products and spending a lot of money to try promoted their products. Second, The products start to growth. In this cases, the company get the profit but not significant. In third cases, the company start get many profit and they try to makes a new product. Example, when Iphone 4 get profit in the market and so many people buy it, Apple try to makes new products like Iphone 5. This is one of the company's strategy to get profit. Because the company see the products is salable in the market and they try to makes a new products to attract the attention of consumers. and the last is, Decline. In this stages, the products is not sold in the market because have been lost with another products. Like Iphone 3 with Iphone 5. Peoples prefer to choose Iphone 5 than Iphone 3. So, Iphone 3 is no longer produced and lost in the market.
What is the Product Life-Cycle Theory? The theory of a product life cycle was first introduced in the 1950s to explain the expected life cycle of a typical product from design to obsolescence, a period divided into the phases of product introduction, product growth, maturity, and decline. The goal of managing a product's life cycle is to maximize its value and profitability at each stage. Life cycle is primarily associated with marketing theory. http://www.inc.com/encyclopedia/product-life-cycle.html
Thera are four stages in Product Life-Cycle Theory: first, Products introduction. Second, Growth. Third, Maturity and fourth, Decline.
I will choose one Industry, like Apple. In first stage, the company still promoted their products. They promote their products into public so that people know about their products. In this cases, the company don't get any profit from the market. Because they still promoted their products and spending a lot of money to try promoted their products. Second, The products start to growth. In this cases, the company get the profit but not significant. In third cases, the company start get many profit and they try to makes a new product. Example, when Iphone 4 get profit in the market and so many people buy it, Apple try to makes new products like Iphone 5. This is one of the company's strategy to get profit. Because the company see the products is salable in the market and they try to makes a new products to attract the attention of consumers. and the last is, Decline. In this stages, the products is not sold in the market because have been lost with another products. Like Iphone 3 with Iphone 5. Peoples prefer to choose Iphone 5 than Iphone 3. So, Iphone 3 is no longer produced and lost in the market.
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