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1 Chapter 1 : Lighting Effects: Advantages And Disadvantages Of Product Life Cycles Every product has a life cycle, which is similar, in some ways, to the cycle of life. First, is the production stage, in which the product is manufactured, processed or harvested. References Introduction Sustainability is developing in as important target for an increasing number of industries and governments. Especially in a faster moving world, which is determined by quarterly period reports, a long term orientation can be a competitive advantage for unlisted companies. They recognised that the purchase price was not the only important criteria. Training or maintaining costs had to be considered for the total cost calculation, too. However, several definitions of Life cycle costing LCC exist that tend to be similar: It includes the costs of the project, development, acquisition, operation, conservation and maintenance and salvage value if it exists. In the following essay several functions of life cycle costing will be drawn up. Furthermore, advantages, disadvantages and criticism of this procedure will be analysed. Alternative Cost Accounting Methods Source: Cole, Sterner, Thereby all initial and working expenses are summed up into one economic figure. In addition the tool offers the possibility to contrast investments from the very beginning to the end. Future costs are discounted back to the present to make it comparable and therefore allows the evaluation of these alternatives Cole, Sterner, That means that by using LCC a company gets the possibility to influence future product costs, for instance through modification of the use of the product itself, at a very early stage. LCC enables firms to comprehend the interaction of different materials or other cost items during the whole life cycle process. As an example engineers increase the durability of a machine but in return the cost for higher quality materials could increase. Hence, through these circumstances a broad and specified analysis of causes and effects can take place. Provided with this total overview of life cycle costs, further savings and optimisations like outsourcing are possible. Consequently the focus of the costing system changes with the life stage of the product. An organisation with a product at an early development stage will use LCC as a planning tool. However, a product in a mature stage needs more to be controlled than to be planned. The kind of control varies from enterprise to enterprise. One organisation will estimate the control of actual and budgeted costs, others will rate the understanding of costs related to environmental effects higher. Together with profitability assessment and the facilitating of decisions, the importance of these objects fluctuates over the different phases Dunk, To fulfil these claims LCC can not be a static accounting tool, it should be more interpreted as a dynamic framework which delivers the right information for decision makers at altered life cycle periods. Figure 2 shows the shift of tasks in detail. Lindholm and Suomala, To handle the constant change the financial department must be connected with other departments to request the required data. At the beginning several alternatives have to be ranked and compared. Afterwards the economical impact has to be evaluated and the needed resources have to be planned. In the middle of the life cycle the planning of the optimal utilisation and cost management are more in focus. The plans for potential expenses are based on the actual costs. Furthermore, the reasons for wrong estimations should be researched and this knowledge should be invested in more precise predictions. Also, the costing practices should be modified to react to environmental changes. In this phase the planning of the optimal life cycle length is necessary to gain maximum profit of the product. Towards the end product related cost calculations together with an overall report of the goods should be created. With this data the divergences to the strategy can be clarified. Hence, an evaluation of the total impact of the product to the organisation can be made. Also the facts are a good basis for future products which are in development and can help to estimate environmental changes early enough. All in all LCC enables companies to get a complete picture about the total product life. Through the overview of historical costs, the actual cost behaviour and the estimation of future costs, firms should be able to use this knowledge for future products to gain a competitive advantage. Therefore, the LCC is an important support for the development of different strategies Lindholm and Suomala, Several hurdles, together with potential solutions for the implementation, are drawn up. In practice the first critical point for an implementation of a LCC-tool is the understanding of the employees. At the beginning this kind of cost evaluation seems to be very unclear and without real guidelines. Furthermore, the already known benefits are not convincing enough. The first doubt is the lack of Page 1

2 experience in predicting the future. How can the company trust in the forecast when the changes in the environment happen faster than ever before? For this reason companies tend to use the acquisition and starting costs. Hence, they are determinant, easy to calculate and reliable. Due to these facts, different options can be compared and are the foundation for decision making. In addition many corporations are forced by shareholders to be as profitable as possible. The quarterly report is important for most companies and therefore they tend to be short-term orientated. A justification of an investment on the basis of initial costs is easier than explanation of several assumptions for the future. However, significant problems may emerge. Maintenance, operation and disposal costs are neglected and complex to predict. Thus, with a total LCC calculation, firms can save money and be more profitable. Also, there is the danger that the investment does not match the long term strategy of the organisation Arditi and Messiha, Page 2

3 Chapter 2 : Pros & Cons of a Product Life Cycle theinnatdunvilla.com Life cycle management applies to marketers, engineers, researchers and managers, because it requires different behavior depending on where a product is in its life cycle. The concept has implications for businesses and consumers alike, and product life cycles offer advantages and disadvantages for both parties. First, is the production stage, in which the product is manufactured, processed or harvested. From there, the product goes through four key phases, which comprise the life cycle: What Is a Product Life Cycle? This is the stage in which the product is introduced to the general public. It is a new product, and most of its initial budget is spent on raising brand awareness and marketing the product. If the product is software, it is likely to have only the most basic features, and likely to have plenty of bugs, as well. If the launch is done just right, sales will slowly start to grow. This stage comes after a successful introduction and involves sales growth. If the product is software, this is the stage in which new features are added and bugs are fixed, as they are reported. If it is a physical product, more bells and whistles are added. The maturity stage shows a peak in sales of the product. The market, at this point, is becoming saturated with the product. Sales are typically boosted by switching up the packaging of the product, introducing spin-offs of the product, or looking to expand into other markets, and so on. The decline stage is characterized by a decline in the sales of the product. In many cases, the product is gradually phased out and a successor is promoted in its stead, as in the case of the iphone. In others, new life is breathed into the product by changing some features and rebranding it. Pros of the Product Life Cycle The product life cycle helps with planning. The product life cycle also helps managers avoid the pitfalls of the different stages. By comparing their products to similar products at similar stages in their life cycles, they can spot mistakes and trends before they occur, so they can prepare accordingly. Cons of the Product Life Cycle The product life cycle is too clean a picture. Consequently, this can cause managers to be too rigid in their strategies, as they expect the sales volumes of their products to follow a script written in stone. Product life cycles can be self-fulfilling. Each stage has a set of recommended actions. Consequently, when a product begins to behave as if it is in a decline, managers might decide to discontinue that product, because that is the protocol. Meanwhile, it could be that the product was merely dipping in sales, as a result of economic externalizations, which will eventually lift. What is the Product Life Cycle? She also studied business in college. Page 3

4 Chapter 3 : Advantages and Disadvantages of Product Life Cycles Bizfluent "The Disadvantages of Using a Life Cycle Costing Concept." The Three Stages of the International Product Life Cycle Theory. The Disadvantages of Lean Accounting. Also Viewed. First, All products follow PLC. But PLC varies a lot, but many researchers apply it without any distinction. It is different for different types of products. It may be possible that product may not go beyond introduction stage and in that case PLC Curve is likely to be a dreamer curve. If the product is instantly successful, then the curve may be contagion curve. The movies like Dabang, Ra-one, Agnipath captured the market in this style. When a product rises fast and decline at the same speed, the curve will be called Fad curve. Second, it appears that life comes to an end with decline, but there are examples when after decline the product may have found new popularity and rejuvenation. Yoga, nature food, and honey come into this category. It makes the task of forecasting difficult. Fourth, the model worked well when the environment was relatively stable, not subject to uncertainty as it is today. Fifth, Reality seldom conforms to theory. Marketing executives believe in the PLC concept â but streetwise marketers point out unusual circumstances might interfere with expected life cycle behaviour. It may result in different shape of PLC. Sixth, the life cycle of a product is dependent on sales to consumers. All consumers do not buy in the introductory stage. Some people buy early, others buy after their friends have bought. For any product to be successful it must be bought by early adopters. Seventh, PLC is a metaphor. Eighth, the length of a product-category life cycles tend to be longer than the individual brand life cycles. A movie may be not live a long life, but movie category is more than a century old. Page 4

5 Chapter 4 : ACCA PM (F5) Notes: A3bc. Benefits of Life Cycle Costing acowtancy Textbook Advantages And Disadvantages Of Product Life Cycle. PRODUCT LIFE CYCLE (PLC) Product life cycle is the sequence of strategies deployed as a product goes through its life theinnatdunvilla.com is necessary to consider how products and markets will change over time and must be managed as it moves through different stages. What are the disadvantages and advantages of prototyping over system development life cycle? An advantage is that users get to actually use the system and give you real feedback. Disadvantage is that you may end-up with a mess â of spaghetti code, and there is a good chance your documentation will not evolve together with the system, as you are dealing with in-production emergencies Prototyping can actually be a part of the traditional development cycle, but in that case it is something you create quickly as a proof of concept with a full intention to throw it away once the requirements are clear. MORE What is the meaning of product life cycle? The product life cycle goes through many phases, involves many professional disciplines, and requires many skills, tools and processes. The different stages in a product life cycle are: Industrial profits go down. Saturation and decline stage. A lot of the same thing can be made cheaply and quickly. Though there are a lot more disadvantages, these 2 advantages mosâ t often outweigh them. One disadvantage is, if something is wrong with the product, there is sometimes no way to tell until several have already been made. Any time machinery is changed out, or the product is redesigned there could be errors. This all results in wasted resources. Building factories and machines to mass produce is expensive another disadvantage in itself. This makes it bad for highly specialized products. Some items just will not sell enough to pay for such massive machinery. Some products have to be "made to fit" and just cant be churned out in one style. Limited resources can be another issue. IE diamond cutting would be bad for mass production, because if something went wrong with the machine, the losses would be catastrophic. If one piece or section of your production line breaks, even one small bolt comes loose, it can result in heavy losses. Not only can this cause malformed or unusable products, but also the time the whole system has to be shut down for repairs. Mass production requires many workers to maintain, working in such dangerous facilities requires you to pay them higher than average wages, including insurance. The advantages of traditional life cycle are mainly focused onmaximizing profitability of a product. Having a product go throughseveral stages of development and test marketing can help topredict whether the product has enough money making potential toinvest in promotion and mass marketing. What are the advantages and disadvantages of the product life cycle theory? The intended advantage of product life cycle theory is to maximizethe profitability of the product. A few disadvantages are thatsometimes products can see a revival in sales which the theory doesnot take into account. Advantages of a waterfall life cycle? Disadvantages of product life cycle? Product Life Cycle PLC is a theory which assumes that all products follow a similar set of characteristics in relation to their pattern of sales. In short, they all go through the same series of stages in their life. One of the many ways to determine the appropriateness of a theory is to considerâ how well the theory can be used to explain empirical evidence. However the first disadvantage can be seen; Where is evidence to support the adoption of the PLC? The second problem is that the PLC simply lacks precision as it loosely describes the pattern of sales through time. And the third issue with PLC would be that, in order for it to be a useful model for making decisions, it should have predictive qualities. Page 5

6 Chapter 5 : What are the advantages and disadvantages of the product life cycle theory The product life cycle is an excellent tool which can be used by Business managers, strategists and marketing managers to come up with product strategies. Such product strategies look at the various stages the product is in the life cycle and then come up with the appropriate strategies. The typical pattern of a product is represented by a curve divided into four distinct phases: Costs are incurred in building distribution ans increasing awarenessthrough heavy promotion. It is hoped that the investments made in new products introduction pay off and the product or service moves to the growth phase.. The firm may either build market share or profitability in thr growth phase. Strategies here are to make differential changes that add value to the product and to target new market. Marketing moves away from promotion through personal selling towards more mass advertising. Sales growth slows at maturity ans the firm moves to defend market position. This is where marketing managers must pay the most attention. Promotion cost increase significantly. This is typically long lasting stage, with some market leaders holding there position over several decades.. The final stage is decline. Here the firm may cintinue to market the product hoping that competitors will discontinue their products. Other strategies are to maximize profit by eliminating as many product costs as possible as sales slow, or else to eliminate the product altogether.. There are four major component of the HO model: Heckscher- ohlin trade theorem. No transportation cost- After industrial revolution in the mid s major cities were connected by railroads, reducing the transportation costs further.. PC Prevails in both products and factors markets. Factors are mobile in each country but are immobile across national borders. Production function exhibit constan retusns to scales CRS and differ among industries. Indentical technology between trading countries. No Factors intensity reversal. Abhishek kumar dated Chapter 6 : Life-Cycle Costing: Meaning, Benefits and Effects Product life cycle is the course of a product's sales and profits over time. Product life cycle (PLC) deals with the life of a product in the market with respect to business or commercial costs and sales measures. Chapter 7 : 8 Important Limitations of Product Life Cycle Concept Life cycle management applies to marketers, engineers, researchers and managers, because it prescribes different behaviour depending on where a product is in its life cycle. The paradigm has implications for businesses and consumers alike, and product life cycles offer advantages and disadvantages for both parties. Chapter 8 : What are advantages and disadvantages of product life cycle 3 Disadvantages Some additional challenges and disadvantages to the application of life cycle in the early stages also need to be considered. First, the product specification and process design assumptions that went into the life cycle are. Chapter 9 : The Disadvantages of Using a Life Cycle Costing Concept theinnatdunvilla.com Important Limitations of Product Life Cycle Concept are given below: 1. First, All products follow PLC. But PLC varies a lot, but many researchers apply it without any distinction. It is different for different types of products. It may be possible that product may not go beyond introduction stage. Page 6