First Mover Advantage

Read the overview below and complete the activities that follow.

When to make a strategic move is often as crucial as what move to make. Timing is especially important when first-mover advantages and disadvantages exist. Under certain conditions, being first to initiate a strategic move can have a high payoff in the form of a competitive advantage that later movers cannot dislodge. Moving first is no guarantee of success, however, since first movers also face some significant disadvantages. Indeed, there are circumstances in which it is more advantageous to be a fast follower or even a late mover. Because the timing of strategic moves can be consequential, it is important for company strategists to be aware of the nature of first-mover advantages and disadvantages and the conditions favoring each type of move.

The goal of this exercise is for you to understand when being a first mover, a fast follower, or a late mover is most advantageous.

Before completing this exercise, be sure to review Chapter 6, Strengthening a Companys Competitive Position; specifically, the section entitled Timing a Companys Offensive and Defensive Strategic Moves.

Companies considering a first mover strategy to gain a competitive advantage must consider all the following except,

Multiple Choice

• will the high marketing and selling costs impact profitability?

• will market demand depend on products and services yet to be invented?

• will investment in new infrastructure be needed before buyer demand can be satisfied?

• will buyers need to learn new skills or adopt new behaviors?

• will buyers encounter high switching costs to move to the new products or services?