first or late mover theory
Post on 24-Oct-2014
144 Views
Preview:
TRANSCRIPT
First or Late Mover Theory
Running head: FIRST OR LATE MOVER THEORY
AMERICAN INTERCONTINENTAL UNIVERSITY
Gary Thomas
Strategic Management
Revised
5/15/2012
First or Late Mover Theory
Management has called a meeting to discuss which way to go with either
developing a new product or service, or competing with an existing product or service.
They want to know if they should follow the “first-mover” theory or “late mover “theory.
As a new consultant for the firm, I have been assigned the task to develop a neat and
organized report for the meeting, thoroughly describing my suggestions, with supporting
facts and evidence that agree or disagree with these theories.
In my research, I find that many organizations and firms have been very
successful with the first mover theory because it gives them the opportunity to be the first
company to offer the product or service to consumers. In organization, time is
everything. Choosing the right time to release a product could give them a competitive
edge. First mover gives them the high ground to establish a loyal consumer base and on a
brand name. Some other advantages of being the first mover is gaining market shares,
securing access and commitments to rare resources, obtaining new knowledge of critical
success factors and issues, positioning in the best location, establishing and securing
long-term relationship with customer, suppliers, distributions, and investors. For
example, Apple, Inc. is one of these types of first mover companies. Based in Santa
Clara, California, Intel is a first mover firm in terms of introducing new production
processes sooner than competitors. First movers’ advantages tend to be greatest when the
competitors are roughly the same size and possess similar resources. However, there are
some risks associated with being a first mover, such as unexpected and unanticipated
costs that occur from the first firm doing business in the new market (David, 2007).
First or Late Mover Theory
Success Firms First Mover Theory
Apple, Inc. was successful with the IPhone, Intel was successful with producing
and introducing the processor, IBM was the first significant company to introduce the 16-
bit business personal computer and Charles Edgar Duryear was the first to introduce the
gas powered car (Who Invented, 2010).
Late Mover Theory Successful
Nokia, the world’s largest mobile phone maker by units, has been a late mover in
the smartphone industry by introducing the Nokia N8 smartphone, followed by Apple,.
Also, Hewlett-Packard (H-P) introduced its first tablet computer and first smartphone in
2011, well behind Apple and Google. Apple sold 14 million IPad computers before the
H-P announcement. In 1901, instant coffee was invented by Satori Kato and the first
brand marketed in 1909 which was called Red E Coffee (Ries, 2007).
Unsuccessful First Movers
Unsuccessful First Movers are companies that first had the invention and the first
to move but lost the market. Companies like Motorola, was the first cellular phone
company, could not hold the market from Apple, Nokia, or Samsung (Einhorn &
Crockett). Salk was an online grocery service in business for 11 years that faced
financial losses and could no longer survive because the company Fresh took over.
Creative Technology, Ltd. was the first to introduce the MP3 player and later out-
marketed by Apple, Inc. (David, 2007).
Pros and Cons to Both Theories
The pros to the first mover theory is to be the first invent, be first at establishing
the patents, choose the best locations, build customer loyalty, develop a brand name and
First or Late Mover Theory
launch aggressive campaigns. The cons are high investment, marketing, technology
investment, manufacturing failures. The pros to late mover theory are allowing the first
mover to establish the market, educate the market, and invest the money. The cons are
losing to loyal customer, brand name, customer satisfaction and law suits (David, 2007).
The late mover theory has some benefits as well as does the first mover theory.
One of the benefits of being late is taking the free ride on the first mover’s investment.
They could also imitate the products that were introduced by the first mover. It is less
expensive than innovation, which is already being paid for by the first mover (David,
2007).
In my position as a new consultant, based on the initial information that I was
given about the company and its managers’ personalities, and after considering all the
pros and cons surrounding the first mover and late mover theories, I would recommend
the late mover theory. Additionally, I find it to be in the company’s best interest to take
the late mover approach with the ground work already established, cutting down on costs
for the company, and allowing the company to enhance the product and/or service.
First or Late Mover Theory
(David, F. 2007). Strategic Management: concept and cases (11th Ed.) Upper
Saddle River, New Jersey: Pearson Prentice-Hall.
Abegglen, J.C. and G. Stalk. Kaisha, the Japanese Corporation. Basic, Book,
New York, 1985
Bell, D.F. “Strategic Windows.” Journal of Marketing, Vol.42 (July, 19780,
pp.21-26.
Carpenter, G.S.and Kakamoto, K. Market Pioneer, consumer learning, and
Product Perceptions: A theory of Persistent competitive Advantage.” Research
paper, Columbia University and University of California, November 1986
(David, F.D. 2011), Strategic Management, concepts and cases (14th ed.), Boston
First or Late Mover Theory
(David, F. 2007). Strategic Management: concept and cases (11th Ed.) Upper Saddle
River, New Jersey: Pearson Prentice-Hall.
top related