Free Essay

1st Movers vs. Late Movers

In: Business and Management

Submitted By dboose
Words 765
Pages 4
The first movers’ theory in business states that being first in a market brings rewards. It also states that he who moves first finishes last, but these are just theories. The concept is simple and to the point “by being the first to enter a new market, the business gains an advantage over the actual and potential rivals” (First Mover Advantage, 2012). The chart below gives advantages and disadvantages for being the first mover to being the late mover.
Advantages of 1st Mover:
By being first to enter the market, the business gains an advantage over its actual and potential rivals*
Can capture market shares easily without worrying about rivals capturing the same customers
The first mover will have established familiar products, brand loyalty, and the best retail outlets
By beating rivals into the market, the first-mover can consolidate its position and compete more effectively continuing to expand Advantages of Late Mover: Have strong resources and capabilities could overtake the first mover.
Free ride on a pioneering firms investments in a number of areas.
By the time the late mover enters the market, the technological and market uncertainty has been resolved giving them an advantage. Late movers have the advantage of seeing what methods work after reviewing the 1st movers methods
Disadvantages of 1st Mover:
Can be less profitable than late movers because of high costs that overwhelm the sales gains
Higher premiums accrues to pioneers, which is directly attributable to the timing of entry (entry costs)
High advertising cost and entrenched in their original ways of doing things
Followers learning from 1st movers mistakes giving them advantages over more efficient processes and technologies. Disadvantages of Late Mover:
*Access to resources will be harder after the 1st mover has access to the best industry resources.
Market Acceptance after the first mover has already started the customer using their products.
The later mover has to catch up with the first mover in terms of learning the business and establishing business contacts.
Competition will be greater after the first mover has opened the market. The late mover will have to establish his resources and capabilities.
Companies successful as 1st movers:
*2012 First Movers includes: VMware, virtualization and cloud computing; DOW, science and technology; Wal-Mart, customer service and brand names w/low prices; GE, appliances; Bloomberg, energy finance, carbon markets, power and water analysis; Syngenta, soybean breeding, trait research; Apple, I-pods, I-pads, technological products. Companies successful as Late movers:
Home Depot, home products; Face book, social media site; Netflix, online movie entertainment; Wells Fargo, banking establishment
Companies unsuccessful as 1st movers:
Microsoft, software products; Yahoo, internet social site; Sears, appliance products; Motorola, camera; Blockbuster, movie distribution Companies unsuccessful as Late movers:
Sony, technological products; Swiss Air, air travel, Commodore Computers; computers, Pan Am, air travel; Hummer, automobile.

*First Mover Advantage, 2012
*Disadvantages of the Late Mover Theory, 2012
* 2012 First Movers, Business and Society Program

Tool Corp Company is considered a late mover and because of this it is recommended that the company explore the free ride in which they will be able to take full advantage of the 1st movers’ mistakes and disadvantages. Recommendations for the company will be to use newer technological methods than the 1st mover did to enhance its capabilities and resources. The company will also work to overtake the 1st mover’s status by having strong resources and market acceptance. The positive ramifications of this move will be that Tool Corp will take full advantage of the lower entry cost to the market and use the lower advertising cost to introduce their products and services which has already been introduced by the 1st mover. The negative ramifications of this move is that the 1st mover has already established brand identity, customer base, and market shares which will be a disadvantage to Tool Corp Company. Feedback measures that Tool Corp will use to know whether their recommendation is sound will be to incorporate short surveys for each product and service to determine if the customers are satisfied with the services and if there is any way the product and/or service can be improved.
References
Disadvantages of the Late Mover Theory. (2012). Retrieved from http://innovationfirstnetworkcard.danielcadams.com/the-disadvantages-of-the-late- mover-theory/

First-Mover Advantage. (2012). Retrieved from http://www.pearsoned.co.uk/Bookshop/article.asp?item=312
First-Mover Disadvantage. (2012). Retrieved from hbr.org/2001/10/first-mover-disadvantage/ar/1
Twenty twelve First Movers, Business and Society Program. (2012). Retrieved from http://www.aspeninstitute.org/policy-work/business-society/First-Movers-Fellowship- Program/2012-first-movers

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