1.0 Introduction
The U.S. trade date of mid 20th century indicated that the U.S. was always an exporter of new products with a monopoly position initially, later overseas production began to displace American exports in some markets, and then foreign manufactured products became competitive in overseas markets, further reducing American exports, finally foreign goods were competitive in the U.S. (Louis&Wells, 1969). The trade flow was influenced by innovations and technical update along with the time running on. Based on the trade flow, Vernon developed the theory of international product life cycle theory in 1966. Today, the theory has been diffusely implemented by MNEs throughout the world. The theory claims that a company should locate its production in the original country of invention (i.e. U.S.) during the growth of manufacturing process, and then the company moves its production to other low developing countries gradually when the product has been adopted and used in the world markets. The company will start from offering the domestic market, and then exporting its new product to other markets of advanced countries, finally importing its product back to those markets from own foreign based assembly or manufacturing facilities. However, the world’s economy is a very important factor for making the theory (Vernon, 1966). Today, international business came into a new century, and the whole world economy has been changed. Hence, our international businessmen have the obligation to evaluate the continuing utility of Vernon’s product life-cycle theory of the MNE. This essay will explore and understand the utility of the theory at first. And then, it will apply relevant case-studies and other data to evaluate the continuing utility of the theor ...