Business Operations: Product Life Cycle and Plant Decisions

Posted on Dec 20, 2025 in Business Administration and Innovation Management

1. Product Life Cycle (PLC)

🔹 Meaning:

The Product Life Cycle refers to the stages a product goes through from its introduction in the market until it is withdrawn. It helps managers make decisions regarding marketing, production, pricing, and resource allocation.

🔹 Stages of PLC:

1. Introduction Stage
   • Product launched in the market.
   • High marketing and promotional expenses.
   • Low or no profit due to heavy investment.
   • Objective: Create awareness and attract early adopters.
2. Growth Stage
   • Demand increases rapidly.
   • Sales and profits rise.
   • Competition starts entering the market.
   • Strategies: Product improvements, wider distribution, aggressive promotion.
3. Maturity Stage
   • Sales growth slows down, reaching a peak.
   • The market is saturated with competitors.
   • Profit margins start declining due to price wars.
   • Strategies: Product differentiation, cost control, loyalty building.
4. Decline Stage
   • Sales and profits decrease due to new innovations, changing tastes, or substitutes.
   • Firms may discontinue, sell, or reposition the product.
   • Strategies: Cost-cutting, finding niche markets, or phasing out.

2. Plant Location

🔹 Introduction and Meaning:

Plant location refers to choosing the geographical site for establishing a business unit or manufacturing plant. The correct location minimizes the cost of production and maximizes efficiency.

🔹 Factors Affecting Plant Location:

1. Proximity to Raw Materials – Reduces transportation cost (e.g., steel plants near coal mines).
2. Nearness to Market – Ensures quick delivery and low distribution cost.
3. Availability of Labor – Both skilled and unskilled labor at reasonable wages.
4. Transport and Communication Facilities – Good roads, railways, ports, and internet access.
5. Power and Fuel Supply – Continuous electricity and fuel availability.
6. Government Policies – Tax incentives, subsidies, and designated industrial zones.
7. Water Supply and Waste Disposal – Especially crucial for chemical, textile, and food industries.
8. Climate and Environment – Industries like pharmaceuticals prefer pollution-free environments.
9. Cost of Land and Construction – Land price, rent, and possibilities for future expansion.
10. Community and Living Conditions – Availability of housing, schools, and hospitals for employees.

3. Plant Layout

🔹 Meaning:

Plant Layout refers to the arrangement of machines, equipment, materials, and workers within a plant to ensure smooth production, minimum handling, and maximum efficiency.

🔹 Objectives of Plant Layout:

• Efficient material flow.
• Minimum handling and transportation cost.
• Better supervision and control.
• Safety and comfort for workers.
• Flexibility for future expansion.

🔹 Types of Plant Layout:

1. Product Layout (Line Layout)
   • Machines arranged in the sequence of operations.
   • Suitable for mass production (e.g., automobile assembly line).
   • Advantages: Low material handling, high efficiency.
   • Disadvantages: Inflexible; a breakdown of one machine halts production.
2. Process Layout (Functional Layout)
   • Similar machines grouped together (e.g., all drills in one section).
   • Suitable for job production and customized products.
   • Advantages: Flexibility, better utilization of specialized machines.
   • Disadvantages: More handling, longer overall production time.
3. Fixed Position Layout
   • The product remains stationary; resources (manpower, machines) move to it.
   • Suitable for large projects (aircraft, shipbuilding, dam construction).
   • Advantages: Less movement of the product, better quality control.
   • Disadvantages: High labor movement, potentially costly setup.
4. Cellular Layout
   • Combines product and process layout principles.
   • Machines are arranged in “cells” to produce a family of similar products.
   • Advantages: Reduced material movement, higher flexibility.
5. Combination Layout
   • A mix of product, process, and fixed layouts.
   • Common in large industries where different product lines exist simultaneously.

✅ Summary Table: