When First Mover Is Rewarded And When It Is Not Harvard Case Solution & Analysis

INTRODUCTION

National and international companies around the world face a dilemma whether to go forward with a brand new product and develop it or review similar products that are already in the market. These companies face a dilemma whether to adopt a first-mover theory or late-mover theory to sustain their business in the long run. The globalization of the world economy and high competition among the national and international businesses lead firms to face multiple issues and challenges such as innovation, time strategy, leadership, modern technology and qualified employees.

Therefore, the companies are consistently being faced with the tough decision strategy regarding the right business moves that will lead the company to gain competitive and customers’ advantage in the future. In a highly competitive environment, if the product within the same marketing from each business provider is quite similar, it makes it difficult for the customers to realize the difference. Therefore, many companies started to adopt innovation and timing strategy that created a competitive advantage by discovering and perceiving the new and better ways to launch the product in the right market segment (Gal-Or, 1985).

Moreover, many new products fail because the demand for them is not enough that allows the company to gain profitable production. Furthermore, it may take time in learning the new product that whether it will be successful or not if the demand is uncertain and and its distributions are unknown. Therefore, choosing the right time to launch a product would give the company a competitive edge and advantage to gain more market share. Apart from that, many business people believe that being the first-mover is the key to success. However, whether the company chooses to be the first-mover or a late - mover, both strategies have strengths and weaknesses.

CASE ANALYSIS

FIRST-MOVER ADVANTAGES AND REWARDS

First-mover advantage is the long-term reward that may result in the first company to launch the new product in the competitive marketplace. The first-mover or pioneering new product is expensive and risky however, it leads the company to gain potential long-term rewards. Moreover, the market pioneer gains advantages based on the early market entry. The first-mover company is more likely to achieve high market share, survive longer and become a market leader in their product category (MB Lieberman, 1988).

Moreover, the first-mover business to move into the market does not indicates that it is the first company such as Amazon.com because the company may not be the first to sell the books online however, it could be the first company to make an entrance into the online book market. Furthermore, the first mover strategy only makes sense when the rewards justify the risks (R Agarwal, 2001).

Following are the advantages or rewards gain by the first-mover company such as economies of scale, ease of recall, innovation leadership, technology leadership, customers’ loyalty and resource capture.

Economies of Scale

The first-mover theory helps the organization to determine economies of scale, which leads to lower costs for Pioneer. When the economies of scale are high, the first-mover advantages are typically enhanced because of low marginal costs, market size, and better logistics.

Loyal Customers and Brand Recognition

Secondly, the first-mover advantage provides an opportunity for the company to establish a loyal customer base before additional competition enters and create a brand name. However, the changing customers’ needs and preferences lead the companies to face various issues and challenges. Therefore, it is highly important for the company to establish an innovation strategy that helps the company to sustain the business in the long-term.

Technology Leadership

Thirdly, technology leadership enables the pioneers to improve the products and value-added services than the competitors consistently. Moreover, the first-mover can lead other companies in understanding the use of modern technology and build a competitive edge in generating innovative products and services.

Furthermore, the company can leverage from technology leadership by applying for a patent for their technology and prevent other companies from copying it. In the modern era, advanced technology also plays a vital role in increasing the profitability and productivity of the company.When First Mover Is Rewarded And When It Is Not Case Solution

Control resources

Fourthly, the first-mover also gets the benefit to control the resources and implement the necessary resources for the business. The resources include the raw material that is required to manufacture a product, supply chain and access to shelf space in the marketplace. One of the advantages explored by Wal-Mart is that the company decided to locate the discount stores in small towns. Moreover, the advantages of controlling resources include strategic location and exclusive contract with the potential suppliers and talented employees...................

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