...THE FIRST MOVER Kelly Holm American InterContinental University Professor Bennett MGT 680 -1303D-01 Abstract The first mover theory implies that the first organization to enter the market has the upper hand in that market. There are advantages and also disadvantages to any theory. We will discuss in this paper some advantages as well as disadvantages of this theory. The First Mover Theory The First Mover Theory implies that the first company to enter a new market gains them superior brand recognition as well as customer loyalty. This is a form of competitive advantage for organizations to gain. There are however, pros and cons to being the first mover and the late mover. Late Mover Advantages Entering the market as a late mover gives the organization the opportunity to step into a market that has already been tested. It has been established and researched by the first mover. Consumers are familiar with the product and the marketing and developing has also been tested to determine the demand and response in the market. The uncertainty is removed from the market by the first mover. There is low risk for the later mover in predicting and how to adept to the market changes. For example, they have the ability to see what methods work without putting up risky investment capital and making bad business decisions. Essentially they have a lower risk in investment. Late movers have the opportunity to piggyback onto the first mover’s investment and improve on the product...
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...First mover vs. late mover theory Carzadean Lawton MGT-680 Strategic Management Dr. Leland Taylor July 14, 2013 Abstract There have been companies that have been successful at being the first to develop a new product and put it out before their competitors have a chance to copy. Some companies have proven that being the first is not always the best and the last sometimes has its perks but being last can also have its failures as well. In this report, we will analysis the advantages and disadvantages of both the first and late mover theory along with the pros and cons of the advantages and disadvantages. After the advantages and disadvantages are provided, an example of real firms who have been successful and those who have failed using each theory. Finally, a definitive and unbiased recommendation of which theory to use will be provided as well as specific attributes which constitute the most advantageous context in which the chosen theory operates. Introduction Companies today are very competitive when it comes to development of new products and putting them out in the limelight for consumer purchase. The number one question that should be asked before a company puts a product out in the market would be is following the first-mover theory an effective way to build new business or would creating a new version of the products with the later-mover theory be a better way to build a new business? First let’s define these specific theories. The first-mover theory is...
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...Unit 3 Individual Project Dana J. Walker Strategic Management October 13, 2013 American Intercontinental University Abstract The following paper will be a comparison of the advantages and disadvantages of the first mover theory and the last mover theory. It will show examples of real firms that have been either successful or a failure as they have employed one of the theories at their company. In my conclusion I will give my recommendation on which theory I think should be used and I will support that with not only details but also an example of a company that I feel validates my claim. The first mover theory can be summed up as “being the first in a new market allowing for an advantage over ones potential rivals” (First-Mover Advantage,” 2013). Doing this will allow for both advantages and also disadvantages to the business that adopts this mind set and then proceeds on that course of action. First Mover Advantages: * Ability to capture market share majority – This is important because “the market’s perception of the product or service is driven by your market share and that determines you prerequisite for growth” (“Why is Large Market Share,” 2008). * Ability to become the low cost leader – Doing this means the firm can minimize your cost to pass the savings on to the customers. This builds customer loyalty to you brand or service. * Create and protect intellectual property – The creation and protection of intellectual property allows the firm to...
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...First – Mover Advantage: the Longevity of Pioneers Main questions to be addressed in the paper: 1. What are “first – mover advantages”? 2. What first – mover advantages make those who still dominate the market last long? 3. How do first movers who still dominate the market conquer first – mover disadvantages and challenges posed by second movers and late movers? 4. How do first movers dominating the market protect their longevity from in – house obstructions and uncontrollable<outside> obstacles? 5. How do they compete with second movers and late movers? 6. What are competitive advantages of first movers who dominate the market? 7. What’s the trend of the first movers towards dominating the market? Why are we interested in this issue? We just see that many pioneers were routed by second movers or late comers. There are not so many first movers who has been dominating the market since they pioneered. There are a number of causes that can drive first movers out of the market or overthrown by late movers. The survivors are interesting. We’d like to know how they do it and remain strong. We’d like to learn the strategies they. We also want to analyze the competition and the trend of the first movers. What to be included in the paper 1. General information about first movers: what are they? What do they do? Why are they called first movers? 2. First mover advantages 3. There are 3 types of first – movers: ones who still dominate the market, ones who were...
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...First movers are companies which were the first to enter a completely new market, therefore offering their customers innovative products and creating new demands for novelty. They can also be companies who were the first to develop a non-existing market in a specific geographical area, which allows them to satisfy the existing demands for customers. These companies are argued to have an advantage over potential new rivals due to their originality in creating a new demand or making an effective decision to open in an area which lacks a certain product. There are three mechanisms which one is essential for a company to gain first mover advantage. For example, technological leadership in production process is as vital as pre-emption of assets and development of buyer switching costs . However, what is definite is that regardless of what market they are in, companies would agree that there is no certainty for success. Despite having the position to exploit position, due to existing asymmetric knowledge with potential competitors, many first movers have experienced failure as a result, either from successful hit and run firms, or simply due to launching a product that did not attract enough consumers. Being an advantageous first mover is when the firm is capable of maintaining dominance for product in the market, thus sustaining its competitive advantage and at the same time, is making abnormal profits in the long run. A first mover can many times have the position of a monopoly which...
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...a late-mover theory or a first-mover theory through the use of positives and negatives of each which will be supported by examples of sixteen companies. Finally, a decision will be made as to which style should be used and why. Introduction Within this paper the late mover theory and the first mover theory will be defined. Once they are both defined each one will be shown to have advantages as well as disadvantages. All of these advantages and disadvantages will be supported with real life situations and businesses that have used both for the positive as well as the negative. This analysis is being done because the head company wants to know which theory to go with in terms of releasing its new product. Unfortunately, the product is unknown as well as many other facets of the company. The benefit to that is the decision can be made with an unbiased approach and only the facts will hold true within this report. Advantages & Disadvantages of the Theories The “First-mover” theory and the “Late-mover” theory are both ways of attacking the global marketplace with regard to product placement as well as the best time to strike. Many corporations in the world will come up with similar or even identical ideas at the same time. The difference is whether to try and be the first to put it on the market or wait and see how the other company does and respond accordingly through “tweaking” the product or just not even making an attempt. First-mover Theory ...
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...ABSTRACT This report examines the issue on first mover in the perspective of study on supporting issue and non-supporting issue. This perspective can be discussion in terms of first mover advantages and disadvantages. While this study replicates some previous research on the issue, it also builds on the previous research by developing new theoretical arguments and adopting different research method. This reports shows that there are many different perspective on how first mover contributes to its advantages and disadvantages to a firms. In this paper, we categorize mechanisms that confer advantages and disadvantages on first-mover firms. Our aim is to begin to provide a more detailed research on the issues and to serve as a guide for future research. INTRODUCTION TO THE ISSUE The aim of this paper is also to present issues of importance for practitioners, including furthering our understanding of this issue in developing markets. As the growth of markets in developed countries has been slowing down, multi-national enterprises (MNEs) in developed countries are becoming more and more dependent on the growth of developing markets. With regard to the issue of first mover, what are the advantages and disadvantages of first mover strategy in a firm? It would be helpful for practitioners to have more knowledge of this issue. In recent years of strategic management scholars have expressed enormous interest in the resource based view of the firm. A previous winner of the SMJ best...
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...First and Second Mover Advantage First Mover Advantage Definition First movers are the companies that take an initial competitive action, either strategic or tactical. First movers are companies that have the resources, capabilities, and core competencies that enable them to gain a competitive advantage through innovative and entrepreneurial competitive actions. By being first, the first mover hopes to gain a sustainable competitive advantage, earn above-average returns until competitors respond effectively and gain customer loyalty, thus creating a barrier to entry by competitors. Any advantage gained generally will vary based on the type of competitive action and type of industry as also to the extent to which the action is difficult to imitate because of the difficulty of imitation, first mover actions based on core competencies should be sustainable for longer periods than actions based on other factors. There also are dangers or disadvantages of being a first mover. There are three major ones: • There are risks related to being first because of the inability to predict success of the action. • Second movers through reverse engineering or imitation can avoid high development costs. • Extent and range of marketplace competition yields greater potential risk. In some instances, companies that delay their response to a competitive action fail to compete effectively and their performance suffers. However, that may not always be true since it may be more appropriate...
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...HEAD: First and Last Mover Theories First and Last Mover Theories AIU – MGT680 Abstract This paper will include a comparison of the advantages and disadvantages of the first and last mover theories. It will include examples of real firms which have been successful or failures as they employed one of the theories at their company. The conclusion will be a recommendation on which theory should be used with supportive details and an example of a company that validates the claim. First and Last Mover Theories The first-mover theory is all about being first to enter a new market which allows a business to gain the advantage over its rivals (First-Mover Advantage, 2014). This is true for developing new geographical or demographic markets for existing products or to introduce new products to an existing market. The first-mover theory advantages include the first one to the market gains defensible ground because it captures the market share much more easily without rivals. The first one to the market also has a leg in with the competition when it does come because the customer is already familiar with their product. The first one to the market also consolidates its position in order to compete more effectively. The first one to the market also captures the majority share and become the lower cost leader. Being first to the market also allows for many disadvantages (First-Mover Advantage, 2014). The first-mover theory disadvantages include that the mistakes the first to the...
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...“First-mover advantages” is defined as the benefits that accrue to firms that enter the market first and that later entrants do not enjoy. The opposite of first-mover advantages is called “late-mover advantages.” (Peng, 2011) First movers enjoy many benefits. For example, they gain advantage through proprietary technology. First movers may also make preemptive investments. Japanese MNE’s picked South-East Asian distributors and suppliers as new members of Keiretsu, but blocked all the late movers. It is also possible for the first movers to erect significant entry barriers for late entrants, such as high switching costs due to brand loyalty. Another great advantage of a first mover is that, they can avoid clash with dominant firms at home. Intense domestic competition may drive some non-dominant firms abroad to avoid clashing with dominant firms head-on in their home market. For example, Toyota was dominant in Japan. But Honda took the opportunity and entered American market ahead of Toyota. Finally, first movers may build precious relationships with key stakeholders such as customers and governments. Motorola entered in China in 1980 and has benefited from its lengthy presence in China. China adopted Motorola’s technology as its national paging standard, which resulted in blocking of other firms. Late movers also enjoy many benefits. First of all, late movers many be able to free ride on the huge pioneering investments of first movers. Second, first movers face greater...
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...vantage//~‘L~ FIRST-MOVER ADVANTAGES Marvin B. Lieberman David B. Montgomery’ October 1987 Research Paper No. 969 1The authors are, respectively, Assistant Professor of Business Policy, and Robert A. Magowan Professor of Marketing, at the Stanford Business School. We thank Piet Vanden Abeele, Rajiv Lal, Mark Satterthwaite and Birger Wernerfelt for helpfiul discussions on earlier drafts. The Strategic Management Program at Stanford Business School provided financial support. / ~‘N ~ Abstract This article surveys the theoretical and empirical literature on mechanisms that confer advantages and disadvantages on first-mover firms. Major conceptual issues are addressed, and recommendations are given for future research. Managerial implications are also considered. INTRODUCTION What, exactly, are first-mover advantages? Under what conditions do they arise, and by what specific mechanisms? Do first-movers make aboveaverage profits? And when is it in a firm’s interest to pursue first-mover opportunities, as opposed to allowing rivals to make the pioneering investments? In this paper we examine these and other related questions. We categorize the mechanisms that confer advantages and disadvantages on first-mover firms, and critically assess the relevant theoretical and empirical literature. The recent burgeoning of theoretical work in industrial economics provides a rich set of models that help make our understanding of first-mover advantages more precise. There...
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...FIRST-MOVER ADVANTAGES Marvin B. Lieberman David B. Montgomery’ October 1987 Research Paper No. 969 //~‘L~ 1The authors are, respectively, Assistant Professor of Business Policy, and Robert A. Magowan Professor of Marketing, at the Stanford Business School. We thank Piet Vanden Abeele, Rajiv Lal, Mark Satterthwaite and Birger Wernerfelt for helpfiul discussions on earlier drafts. The Strategic Management Program at Stanford Business School provided financial support. / ~‘N ~ Abstract This article surveys the theoretical and empirical literature on mechanisms that confer advantages and disadvantages on first-mover firms. Major conceptual issues are addressed, and recommendations are given for future research. Managerial implications are also considered. INTRODUCTION What, exactly, are first-mover advantages? Under what conditions do they arise, and by what specific mechanisms? Do first-movers make aboveaverage profits? And when is it in a firm’s interest to pursue first-mover opportunities, as opposed to allowing rivals to make the pioneering investments? In this paper we examine these and other related questions. We categorize the mechanisms that confer advantages and disadvantages on first-mover firms, and critically assess the relevant theoretical and empirical literature. The recent burgeoning of theoretical work in industrial economics provides a rich set of models that help make our understanding of first-mover advantages more precise. There is...
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...Companies like Wal-Mart achieve first mover advantages by doing things first. Wal-Mart has always considered information technology as a competitive advantage over their competitors. They have used their innovative skills in developing the largest private satellite network and database system in the world. Other technological innovations that Wal-Mart has been first at include using computers and bar codes to track sales and inventory data and then share this information with their suppliers. This is called an EDI system. According to the Wal-Mart case study, “The installation of electronic data interchange (EDI) enabled an estimated 3,600 vendors, representing about 90% of Wal-Mart’s dollar volume, to receive orders and interact with Wal-Mart electronically.” (Bradley and Ghemawat) This allows the stores to always have stock without running out of anything. Another of Wal-Mart’s first mover advantages is from their strategic choice of locations. Wal-Mart strategically places their stores within the proximity of their distribution centers. This allows the stores to keep their inventory at a minimum. Wal-Mart has a two-step hub-and-spoke distribution network which consists of a truck bringing the merchandise to the distribution center and then is sorted out for delivery to a Wal-Mart store usually within 48 hours. Wal-Mart places their stores no more than a day’s drive from any distribution center. These distribution centers carry more than 85 percent of all the merchandise...
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...influential political assassinations. For the decade though, and despite a mild recession between 1960 and 1961, the average still managed a respectable 30% gain from the 616 level to 800. The 1970s marked a time of economic uncertainty and troubled relations between the U.S. and certain Middle-Eastern countries. To begin with, the decade started off with the ongoing Recession of 1969–70. Following that, the 1970s Energy Crisisensued which included the 1973–75 recession, the 1973 Oil Crisis as well as the 1979 energy crisis beginning as a prelude to a disastrous economic climate injected with stagflation; the combination between high unemployment and high inflation. However, on November 14, 1972, the average closed above the 1,000 mark (1,003.16) for the first time, during a brief relief rally in the midst of a...
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...highlight how the theories of the first mover and fast second are recognized as the primary approaches to achieving innovation and domination in the market space. Buisson and Siberzahn (2010), insist that neither of these two theories can fully account for market domination and offer research and a comprehensive literature review that to suggest and explain the assertion that market domination is achieved by using four types of breakthroughs either concurrently or separately. The intent of this paper is to describe and highlight the shortcomings of the first mover and fast second theories as described by Buisson and Siberzahn (2010). Summarize their views of the four breakthroughs, review the literature provided, examine the methodology, and report the key findings of their article. The Problem With The First Mover Approach According to Buisson and Siberzahn (2010), neither first mover nor fast second innovation models can fully explain market domination by a company. The first mover approach is one in which the company enters the market, creates and dominates the new area (Buisson, B. & Siberzahn, P. 2010). Buisson and Siberzahn (2010) note that the first mover approach is on top of mind of business leaders due to the introduction of Kim and Mauborgne’s Blue Ocean Strategy (2004). Theoretically, blue oceans represent a sphere of a newly created market where pioneers can dominate, competition is limited or nonexistent, and first movers hold the overwhelming advantage (Buisson...
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