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Being the First Mover in an Industry

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What are the advantages and disadvantages of being the first mover in an industry?

Are buyer-switching costs the most important factor to becoming the first mover?

Give some examples of first and late mover firms. Which were the most successful? Why?

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This solution discusses aspects of being the first mover in an industry.

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Question: What are the advantages and disadvantages of being the first mover in an industry? Are buyer-switching costs the most important factor to becoming the first mover? Give some examples of first and late mover firms. Which were the most successful? Why?
200-300 words

Business scholars, practitioners and theorists use the term 'first mover" to refer to a company that is first to enter a market. First mover companies are also known as market pioneers, however, they differ from inventors; companies that were the first to develop a product. The First-Mover Advantage (FMA) concept applies when the first company to enter the market segment seizes control of key resources to gain significant market share and competitive advantage. According to Grant (2003) it is important for companies to conduct through analysis of the internal and external environments to assess the costs, benefits and underlying risks of being the first mover. Once a company determines the rewards outweigh the costs and risks, then the company can begin to align the necessary infrastructures and resources to pursue the market pioneer goals. Ettington (2010) posits that there are two phases companies undergo prior to attaining first-mover advantages. According to Ettington (2010) first, "the company must have an opportunity to be first at something, either through skill or luck and, the company must be able to capture the benefits of being first" (p3). The advantages of being the first mover in an industry include: technology leadership, control of resources, and buyer switching costs (Lieberman and Montgomery, 1998).

Technology Leadership

Technology plays a significant role in today's business environment regardless of industry sector or size. According to Lieberman and Montgomery (1998) first mover companies can dominate late market entrants by understanding how best to leverage the use of technology to attain desired goals and objectives in the market. By being the market pioneer, a ...

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