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First mover Last mover theory

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First mover Last mover theory and explanation of both.

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https://brainmass.com/business/journal-entries/first-mover-last-mover-theory-352817

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As an introduction, it is necessary to introduce both the first mover theory and last mover theory in an effort to define and clarify what each theory represents. Essentially, the first mover theory defines entry into the market with a new product prior to any competition's entry; becoming the first company to market or develop a product. This theory (being first) has long been thought of as being the only way to "win". With the onslaught of the computer age and internet, the first mover theory is a predominant method of success, and has created countless millionaires. "The internet phenomenon of late has instigated a fresh surge of interest in the first mover advantage theory and offers proof of its continued relevance today" (Fahy, 2006). The second, late mover theory's premise is to enter the market with a product (or similar product) after a competitor has introduced the product to the mainstream marketplace. The thought process behind this theory is that by waiting a company can collect data and get a feel for the marketplace based on a competitor's success or failure with the product. The hope in this theory is in releasing an improved product based on this information thus creating a superior product addressing and correcting any problems with the company that followed the first mover theory.

Both the first mover theory and the last mover theory have their advantages and disadvantages. It all basically boils down to the product, market research, and solid innovation. Either theory can be wrong, just the same as any theory can be correct. The following will address the pros and cons of each. The predominant ideas that must be entertained prior to deciding on any of these theories must be considered. First, a company must evaluate the potential of the product and its ability to establish certain standards. Second, a company must thoroughly examine the amount and type of risk in the product and ascertain the firm's ability to manage the risk. Third, a company must ascertain the availability of extra/complementary resources and the importance these will be to the company. Finally, an important factor for the developing company must lead time. This is best described as the company's resources available to protect their innovation.

There are distinct advantages to the first mover theory. The primary advantage is that the company is taking the first initial action for a product in a competitive market. If the venture is a success, the company will be turning high profits in an untapped market prior to the response of competitors to get a piece of the pie. A successful venture such as this can also, most importantly, create a customer loyalty base. This can prove to be vital in retaining a customer base even in the face of competitors entering the marketplace with a competitive product. These first mover theory ventures also have the opportunity to earn substantially higher profits than is the norm for new products introduced in the marketplace. The ability to corner an untapped market share coupled with the absence of competitors allow for a successful or revolutionary product to enjoy domination in the marketplace.

Although the advantages seem to suggest that first movers rule the industry, there are certain disadvantages that can arise within the first mover theory. According to Gal-or, 1984 examples of this are "when an entrant undercuts the price of the incumbent...or when the follower in the development phase invests more than the leader and is consequently more likely to collect a patent in a research and development game." A first mover company also has the disadvantage of ...

Solution Summary

When companies are deciding to introduce a new product, part of a product strategy for development must entertain the first mover vs. last mover theory. These two theories remain a hot debate as there a good and bad points for each. The question must be determined based on the product and the great many details concerning the product. Success has been achieved via utilization of the first mover theory as well as the last mover (2nd mover) theory.

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First Mover Last Mover Theories

Discuss the advantages and the disadvantages of the first mover and the last mover theories. Provide an unbiased comparison of the two theories.
- Identify at least four advantages and four disadvantages for each theory and comprehensively show how each advantage or disadvantage affects the use of that theory (a minimum of 16 pros/cons in all).
- Identify at least four examples of real firms who have been successful and four examples of real firms who have been failures using each theory (a minimum of 16 real firms in all).
- Provide a definitive and unbiased recommendation of which theory to use. You should provide the specific attributes which constitute the most advantageous context in which the chosen theory operates and justify your recommendation with researched support, logic and examples.

Utilize the following format:
Q1 Identify at least four advantages and four disadvantages for each theory and comprehensively show how each advantage or disadvantage affects the use of that theory (a minimum of 16 pros/cons in all).
Q1a1 advantage number 1 using the first-mover theory—list and explain example
Q1a2 advantage number 2 using the first-mover theory—list and explain example
Q1a3 advantage number 3 using the first-mover theory—list and explain example
Q1a4 advantage number 4 using the first-mover theory—list and explain example
Q1a5 disadvantage number 1 using the first-mover theory—list and explain example
Q1a6 disadvantage number 2 using the first-mover theory—list and explain example
Q1a7 disadvantage number 3 using the first-mover theory—list and explain example
Q1a8 disadvantage number 4 using the first-mover theory—list and explain example
Q1b1 advantage number 1 using the late-mover theory—list and explain example
Q1b2 advantage number 2 using the late-mover theory—list and explain example
Q1b3 advantage number 3 using the late-mover theory—list and explain example
Q1b4 advantage number 4 using the late-mover theory—list and explain example
Q1b5 disadvantage number 1 using the late-mover theory—list and explain example
Q1b6 disadvantage number 2 using the late-mover theory—list and explain example
Q1b7 disadvantage number 3 using the late-mover theory—list and explain example
Q1b8 disadvantage number 4 using the late-mover theory—list and explain example

Q2 Identify at least four examples of real firms who have been successful and four examples of real firms who have been failures using each theory (a minimum of 16 real firms in all).
Q2a1 example 1 of real firm success using the first-mover theory—list, explain example
Q2a2 example 2 of real firm success using the first-mover theory—list, explain example
Q2a3 example 3 of real firm success using the first-mover theory—list, explain example
Q2a4 example 4 of real firm success using the first-mover theory—list, explain example
Q2a5 example 1 of real firm failure using the first-mover theory—list, explain example
Q2a6 example 2 of real firm failure using the first-mover theory—list, explain example
Q2a7 example 3 of real firm failure using the first-mover theory—list, explain example
Q2a8 example 4 of real firm failure using the first-mover theory—list, explain example
Q2b1 example 1 of real firm success using the late-mover theory—list, explain example
Q2b2 example 2 of real firm success using the late-mover theory—list, explain example
Q2b3 example 3 of real firm success using the late-mover theory—list, explain example
Q2b4 example 4 of real firm success using the late-mover theory—list, explain example
Q2b5 example 1 of real firm failure using the late-mover theory—list, explain example
Q2b6 example 2 of real firm failure using the late-mover theory—list, explain example
Q2b7 example 3 of real firm failure using the late-mover theory—list, explain example
Q2b8 example 4 of real firm failure using the late-mover theory—list, explain example

PLEASE NOTE: the advantages and disadvantages require to, "comprehensively show how each advantage or disadvantage affects the use of that theory," explanation, the successes and failures simply ask you to explain why the real firm was a success or failure, stating the firm over which they succeeded or which caused their failure should be done.
Q3 Provide a definitive and unbiased recommendation of which theory to use. Provide the specific attributes which constitute the most advantageous context in which the chosen theory operates and justify recommendation with researched support, logic and examples.

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