...ability as drivers of competitive behavior. 4. Discuss factors affecting the likelihood a competitor will take competitive actions. 5. Discuss factors affecting the likelihood a competitor will respond to actions taken against it. 6. Explain competitive dynamics in slow-cycle, fast-cycle and standard-cycle markets. CHAPTER OUTLINE Opening Case Competition Between Hewlett-Packard and Dell: The Battle Rages On A MODEL OF COMPETITIVE RIVALRY COMPETITOR ANALYSIS Market Commonality Resource Similarity DRIVERS OF COMPETITIVE ACTIONS AND RESPONSES Strategic Focus Who Will Win the Competitive Battles Between Netflix and Blockbuster? COMPETITIVE RIVALRY Strategic and Tactical Actions Strategic Focus Using Aggressive Pricing as a Tactical Action at Wal-Mart LIKELIHOOD OF ATTACK First-Mover Incentives Organizational Size Quality LIKELIHOOD OF RESPONSE Type of Competitive Action Actor’s Reputation Dependence on the Market Popped the Top? COMPETITIVE DYNAMICS Slow-Cycle Markets Fast-Cycle Markets Standard-Cycle Markets SUMMARY REVIEW QUESTIONS EXPERIENTIAL EXERCISES NOTES LECTURE NOTES Chapter Introduction: The competitive landscape of the twenty-first century will be characterized by increasing globalization, advanced technological development, and other factors that will lead to an environment that is more dynamic and charged with rivalry. Firms will act and react in a dance of sorts, but one involving very high stakes—even...
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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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... 1) Emerging market exists for ED pharmacies 2) First mover’s product is not superior enough, which provides chance for followers to defeat the first mover. PIC Guideline This should be a dual-driven new product development case. 1) Market driven, a great amount of male is suffering ED problems now. These problems need to be solved immediately, which means a great market there. 2) Technique driven, new physical technique can provide effective and safe oral treatment for ED, meanwhile minor side effects from immature pharmacies can be reduced by the new technology. New Product Category Levitra is a new-to-firm product 1) It is completely new for the company GlaxoSmithKline and Bayer 2) There is a first mover in the same market already when GlaxoSmithKline-Bayer began to launch Levitra. So, it is not so new-to-world product. 3) The concept sequence for this product should be N-T-F. There is market inquisition first, then GlaxoSmithKline develop the relative new techniques, and finally, new products are manufactured and introduced to market. Strategy selection This is a Market/Technique dual-strategy driven product Objectives 1) ED market is very big, profits and revenue should be considered by every company into this market 2) To achieve this target, company should get a certain position in the market, in other words, they should get a big market share. 3) But, the first mover has already been there. It is quite possible that customers...
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...This paper is a case study of BOL.com Netherlands. BOL.com is founded by the German company Bertelsmann in 1999. Bertelsmann saw an opportunity in selling books and CD’s through the internet. BOL.com was the first-mover in this new and developing market. The case study starts with the emergence of BOL.com, this will give a historical overview of the growth of BOL.com. Next the current situation of BOL.com will be described and the implementation of the organizational structure. This will continue with the growth and expansion in relation with a SWOT analysis and Porter fiveforces to elaborate on the company’s profile and market. In relation to both analysis the strategy of BOL.com will be discussed. The financial analysis gives an overview of the financial events of BOL.com in the last 10 years. The major events and reflection of BOL.com will give an operational insight of BOL.com. Finally the conclusion and recommendation for BOL.com. 2. The Emergence of BOL.com in the Netherlands BOL.com was founded by the German company Bertelsmann in 1999, they launched the online web shop in fourteen countries. The products sold in these shops were books and compact discs. In the Netherlands the company started with 15 employees (Mini tijdlijn). BOL.com was the first-mover in a new market, before this time no internet retailers existed. BOL.com was the abbreviation of ‘Bertelsmann on-line’. Daniel Ropers became the Managing Director since mid-2000 after being involved with BOL...
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...In the perfectly competitive market, firms cannot sustain the long-term profitability as the entrance of potential competitors can drive down the price to the point where economic profits are zero. But in reality, some firms persistently enjoy profits that are higher than its rivals. Resource-based theory (RBV) is used to explain this phenomenon by stating that ‘the unique bundle of resources that some firms have obtained help to shape the firms’ value-creating strategies which are implemented to gain a competitive advantage’. This essay will firstly examine the characteristics of the resources which are the basis of a competitive advantage, then analyze the isolation mechanism which help to maintain firms’ competitive advantage. Finally limitations of this theory will be discussed. According to McGahan and Porter’s research, 31.71% of the factor influencing business profitability is suggested to be firms’ resources and capabilities. These resources and capabilities have to be heterogeneous and imperfectly mobile because they can be inherently non-tradable, firm-specific, and co-specialized. Moreover, resources should fulfill VRIN criteria to enjoy a competitive advantage and sustainable performance. Firstly, resources must be valuable enabling a firm to exploit opportunities and neutralize threats by improving its efficiency and effectiveness. Secondly, resources must be difficult to find among the existing and potential competitors of the firm. Hence resources must be rare...
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...Likelihood of attack: second mover become first mover This is a Multimarket Competition age. Netflix wants to win this battle, but they have to beat their competitors in several product or geographical markets. Although Netflix is not the first mover, they’ve learned from the mistakes from Blockbuster. Forecasting the market share, innovating new methods for customers is easy to use. What Netflix said is “Our business model went from dead, to streaming, but all the money is made on DVD, we’re actually delivering great content and people pay instead of going to Blockbuster”. When Netflix was founded in 1997, Blockbuster’s objective was to remain the world’s largest video rental chain, and operated more than 6,500 franchise stores in 17 countries. It is a slow-cycle market and the Blockbuster monopoly situation of the market ,and the other company supply the similar service, but the Netflix understands that the DVD rental industry is not so attractive because of its low barriers to enter into this industry and potential entrants to market range from the actual studio that it created and own the rights of content to illegal digital distributors. The most important problem is Intensive rivalry of competitors are too high, so Netflix has to do strategies for Instituting Change. They are not the first movers for DVD rental, but they are the first one of the online rental,In the late 1990s, with the booming in number of Internet users,Reed Hastings knows invest in Internet to get...
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...maintaining the status of being the Apple of the consumer’s eye (pun intended). Apple maintains a competitive and first-mover advantage by handily balancing Porter’s Five Forces Model and executing a supreme customer relationship management (CRM) strategy, as chronicled in an example found in Baltzan’s Business Driven Information Systems (2012). This paper will apply Porter’s model against Apple’s information management practices, and will update case information with new product lines and lessons learned all under the guise of Apple adages. The Big Apple (Taking a Bite out of the Market) No research is required to determine that Apple has a competitive edge in its market space. Just take a peek into an Apple store or scan a street corner before an Apple product makes its debut and you’ll see a melting pot of consumers who faithfully honor Apple like a religion. Apple garnered this legion of followers by morphing from a PC provider to an iPod, iPhone and iPad provider, giving Apple a jump on the competition as the first-mover for these digital devices. Being first-to-market with entertainment and communication devices such as the iPhone, a cell phone with an operating system, gave Apple a competitive advantage because the new technology was synonymous with the name Apple. While a competitive advantage can be short-lived, Apple continued to leverage its first-mover advantage to maintain its competitive advantage, initially because of limited competition and strong brand recognition...
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...Serv Bus (2012) 6:265–278 DOI 10.1007/s11628-012-0135-0 EMPIRICAL ARTICLE Innovation and imitation effects in the mobile telecommunication service market Sang-Gun Lee • Byeonghwa Park • Si-Hyeon Kim Hong-Hee Lee • Received: 11 February 2011 / Accepted: 26 January 2012 / Published online: 15 May 2012 Ó Springer-Verlag 2012 Abstract This study investigates adoption patterns of the first mover and the followers in the Information and Communication Technology industry. The continuous behavior of adopters over time is difficult to analyze and most previous studies were cross-sectional rather than longitudinal. In order to overcome these limitations, a mathematical diffusion model with verified official time-series data is used to analytically investigate the impact of both innovation and imitation effects on the mobile phone adoption in South Korea. The results showed that the imitation effect of the first mover was larger than those of the followers in the mature mobile telecommunication services market in South Korea. The innovation effect of the follower was larger than that of the first mover, and the innovation effect was larger than the imitation effect in the market. Keywords Innovation effect Á Imitation effect Á Diffusion model Á Mobile telecommunication market S.-G. Lee Department of Business Administration, School of Business Administration, Sogang University, Shinsu-dong #1 Mapo-gu, Seoul 121-742, Korea e-mail: sglee1028@yahoo.com B. Park College of Business Administration...
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...1. Launching Oxyglobin without waiting for Hemopure -First-mover advantage Launching at low price($80 ~ $100) | Launching at high price ($250 ~ 300) | Pet owners are price sensitiveVeterinarian’s role of gatekeeper | Emergency care practice. Low pricing jeopardize pricing Hemopure. | 2. Postpone launching Oxyglobin until Hemopure’s FDA approval. -Mixture of production of Oxyglobin and Hemopure. -No prior unfavorable price expectation. -Market research on Oxyglobin is available. Launching Oxyglobin without waiting for 2 years for Hemopure is the first alternative we came up with. As no other competitors are in the vet blood substitutes market, Biopure will definitely have the first-mover advantage as long as they launch it in a timely manner/fast enough. Also any other competitors won’t be able to jeopardize the Oxyglobin’s profitability as it takes about 2 to 5 years for them to obtain FDA-approval. Assuming that Biopure decides to launch it, they also have to consider how much they are gonna charge for the product. In the first option, the price will be set at a low rate, ranged from 80 to 100 because pet owners are price sensitive. The average cost that pet owners spend per visit to the vet is about $60, which is pretty low. Also, Vets double the price as they sell the product so it is necessary to keep the original price low. For instance, even if Biopure sells a product at $50, Vets will sell the product at $100 to make profits. Therefore, pet owners...
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...intensively, the market place is attracting many fast growing new entrants as well. To achieve its growth goals, Rogers need to determine an optimal set of corporate level strategy and business level guiding policies to maintain its market leader position in the long term. Rogers need to seek ways to leveraging its resource strength and improving upon its weaknesses to develop a long-term sustainable competitive advantage in this highly competitive industry. Evaluation Criteria With growth in mind, the strategic decision must take into account the following criteria: 1. Leads to sustainable long-term competitive advantage 2. Growth forecast (Industry and Segment conditions, Market Trends) 3. Competitive viability (Barriers to Entry, Substitutes) 4. Achieves competitive cost structure Strategic Recommendation: Integrated LTE (4G) Wireless Technology The advanced LTE network boasts higher efficiency, faster speeds, and broader bandwidth capabilities. As wireless devices continual to demand for better network performance, the upgrade to the more sophisticated LTE or fourth generation of wireless data transmission technologies is an inevitable step for wireless service providers. To succeed with this strategy, Rogers need to build on its core advantage in technology infrastructure, and achieve a faster speed-to-market than its competitors. The advantages to be leveraged from adopting the LTE networks are two-fold. First, Rogers’...
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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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...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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...Kentucky Fried Chicken and the Global Fast-Food Industry Case Analysis 1.0 Source Problem The change in demographic trends in the past two decades has seen an overall increase in costs for KFC and other fast food chains. Due to immense price competition and saturation of the US market, KFC is unable to raise its prices to cover the increased costs. The slower US population growth rate, oversupply of fast food chains and the minuscule 1% growth in the US restaurant industry per year has resulted in KFC¡¦s focus on expansion of their international markets. 2.0 Secondary Problems 2.1 Short Term - New product introductions are slow. - Market research inefficiency. Eg. Germans were not accustomed to buying takeout or ordering over the counter. McDonalds performed better in this aspect. - Crispy strips and chicken sandwiches cannibalized the fried chicken sales. 2.2 Long Term - Differences between the PepsiCo and KFC corporate strategy and culture. - PepsiCo/KFC poor relationship with franchisees. - Increased competition from direct and indirect competitors. - Reduction in market share in the US market. - Risks involved in international operations: long distances made it difficult to control quality and service, increased transportation and other resource costs, and time, culture and language differences increased communication and operational problems. - Fast food sales grew at a slower rate (5%) in comparison to other sectors in the restaurant industry. ...
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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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...Introduction DHL Worldwide Express headquartered in Bonn, Germany, a privately held worldwide delivery service comprised of DHL Airways and DHL International, is the world’s oldest and largest international air-express company. They begins by operating door-to-door express delivery express, transporting documents only between San Fransisco, California, and Honolulu, Hawaii. DHL was founded by three young shipping executives; Adrian Dalsey, Larry Hillblom, and Robert Lynn who were casting about for a way to increase turnaround speed for ships at ports. On 25 September 1969 they incorporate DHL. In 1998, Deutsche Post began to acquire shares in DHL. It finally reached majority in 2001 and completed the purchase in 2002. Finally, by 2003 this company status is under the business group of Deutsche Post World Net (DPWN) Germany. Deutsche Post then effectively absorbed DHL into its Express division, business units and subsidiaries. Currently they delivering to over 70,000 destinations in 227 countries with 6,500 offices around the world, the company had over 150,000 employees globally. Belgium-based DHL International (DHL), in collaboration with its Chinese partner; Sinotrans which was also known as the China National Foreign Trade Transportation (Group) Corporation, launched an international express service, in China. Its core business was transporting documents and packages, which was a door-to-door delivery service particularly targeting parcels and freight items. The service...
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