Strategic Management - First or Later Mover Theory - Research Paper Example

Being the first in the market has its own advantages and disadvantages. Likewise, being a later mover has its advantages and disadvantages. This essay focuses on identifying the advantages and disadvantages of being a first-mover or later movers, four examples of real firms who have been successful, and four examples of real firms who have been failures using each theory. Additionally, the paper will recommend the best theory that the company should use to get the product into the market (Burrows, 2008; Daye, 2010).

First mover or Later Mover Theory

The time a company launches a product into the market is crucial and determines the chances of success. There is an existing notion that being a first mover to invent or introduce a product into the market always leads to success. However, others believe that chances of being successful are higher when a company waits for others to introduce the product first so that you can imitate some of their ideas. Being the first mover does not always give a company the first-mover advantage.

Advantages of First Mover

Being the first to introduce a product helps a business gain a competitive advantage over potential competitors. This is so because they are able to gain the loyalty of customers before the rivals set in.

Being the first mover give a company advantage in the acquisition of resources before competition set in resulting in competition for the resources.

Being first movers give a company the benefit of building strong brand recognition before rivalry emerges.

Another advantage is that the company gets the opportunity to register trademarks and patents of their invention before other companies get into the market. This gives the company a competitive advantage (Daye, 2010).

Advantages of Late Mover

Late movers do not invest much since they are imitators and rely on first mover’s investment.

Late movers easily gain acceptance since a similar product is already in the market and they do not have to educate consumers much since they are already aware of a similar product.

Later movers are advantaged since they can accommodate customer needs and preferences that may have arisen after the first launching of the product.

Additionally, later movers can forecast how customers will react to the imitated product and respond accordingly.

Disadvantages of 1st Mover

The company has to edify customers on how to use the new product, which can be costly.

Additionally, the company has to educate all the individuals in the supply chain on how the product works.

Another disadvantage is that a company can make serious and costly mistakes. Other companies can learn from such a mistake and become advantaged competitors to the inventor.

The other disadvantage occurs when a first-mover realizes their idea was not good enough and another company had a related idea and launches the product. The company will thus have no time to modify its idea and enjoy a first-mover advantage (Davis, 2007).

Disadvantages of Late Mover

If the first movers had registered trademarks and patents, the later movers may not be able to imitate the product.

Another disadvantage is the difficulty in convincing customers to switch from the first mover's product.

Another advantage is the strain to establish brand recognition since the first movers had already gained brand loyalty.

Later movers face challenges in resource acquisition due to competition with first mover and other companies that could be already in the market.

Late movers face competition from the established first movers.

Companies successful as 1st movers

Apple is a good example of a first mover. Being the first to invent and launch iPhones gave Apple, a completive advantage over Android phones (Burrows, 2008).

America On-Line (AOL) was the first internet provider and still has great brand recognition.

Amazon.com is another example of a successful first mover. They were the first to sell books online and remain the best performing.

E Bay was the first mover in conducting business through electronic media and is still successful.

Companies successful as Late movers

Although Satori Kate invented instant coffee, later movers such as Maxwell’s House and Nestle are successful instant coffee manufacturers.

Though Beiersdorf AG was a later mover in the manufacture of cosmetics, it is among the best three cosmetic manufacturers.

GE was a later mover in the manufacture of CAT scanners but took the lead.

Though Diners Clun invented credit cards, later movers such as Visa and American Express are performing better.

Companies unsuccessful as 1st movers

Although Motorola was leading in cellular phones, other companies such as Apple and Nokia outdid it.

Peapod grocer is another example of an unsuccessful first mover, who initiated online grocery services. However, later movers challenged the company (Einhorn & Crockett, 2008).

Creative Technology, Ltd., a first mover in disk drive MP3 player was outdone by Apples Inc. iPod.

IBM was the first mover in introducing 16-bit business personal computers but is currently not among the leading computer brands.

Companies unsuccessful as Late movers

Polaroid was sued when it attempted to imitate Kodak’s instant camera (Eastman Kodak Company, 2010).

An example is Mitsubishi, a later mover, facing difficulty as it attempts to convince customers to switch from using Samsung panel television.

Android Inc. tried to Imitate Apple’s iPhone has not outranked Apple’s iPhone.

Although Cricket was a later mover and tried to imitate some ideas from Motorola in offering cellular phones, it failed terribly (Cricket Communications, 2010).

Recommendations

Having discussed the advantages and disadvantages of the first-mover theory and later-mover theory, the latter theory is a better choice. This is because the company can reduce the chances of failure by learning from the mistakes of pioneers. Developing a new product can be expensive. Additionally, convincing the customers that they need the product is more difficult. This will require the company to spend too much money and time. Additionally, the company does not understand the needs and preferences of the customers, which is risky. By being a later mover, the company will avoid the hustle of redesigning the product. However, being a later mover will give the company time to understand the taste and preference of customers and develop a better product (Corl, 2008).