Abstract Book of the 9th International Conference on Applied Research in Management, Business and Economics
Year: 2025
DOI:
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Analyzing The Growth and Decline of Wholesale and Retail Trade with The Product Life Cycle Theory
Prof. Wali I. Mondal
ABSTRACT:
In 1966, Raymond Vernon published a seminal paper on international investment and international trade. Deviating from the Heckscher-Ohlin theorem, which was based on two products, two countries and two factors, commonly referred to as 2x2x2 model, Vernon explained the life cycle of a product originating in a single country. Even though the original Vernon model was elucidated in three stages, namely, location of new product, the maturing product and the standardized product, subsequent studies interpreted the life cycle of a product in four stages: introduction, growth, maturity and decline. Some studies decomposed the decline phase in two stages, namely, saturation and abandonment. In this paper, we analyze the growth and decline of one U.S. based wholesale firm, namely Costco and three retail trade firms, namely Wal-Mart, Sears, Roebuck and Company and K-Mart. The rationale for selection of the four wholesale and retail trade firms is twofold. First, all of these firms either conducted or continue to conduct business internationally, a premise of both Heckscher-Ohlin and Vernon models. Secondly, our study combines such conventional tool of analysis of retail trade as consumer perception of value and quality, application of the three degrees of price discrimination and innovative ways of maximizing profit. The results of our study shed light on some aspects of profit maximization by the wholesale and retail trade firms not analyzed previously.
keywords: Product life cycle, Vernon model, Heckscher-Ohlin theorem, whole sale and retail trade