First Movers vs. Late Movers

Abstract

The recent economic turmoil warranted the adaptation of new techniques and approaches to gain and maintain competitive edge over other companies. Business firms are shifting their attention towards strategic planning and several strategies are being devised as part of effort to maximize profit. In the wake of these developments, the paper attempted to address the question of which one the competitive approaches should be adopted: first mover approach or the late mover approach. The paper discussed advantages and disadvantages of both theories and observed their impact on different companies. Defining the scope of each theory, this paper attempted to evaluate the advantages and disadvantages of each theory. The paper finally identified and listed some of the real world business firms with either successful or unsuccessful implementation of one of these approaches.

Introduction

The global economic recession has transformed the business world and today the commercial arena is different and more complex than it was some years ago. Many businesses were washed away in the tsunami of financial crisis. Now the consumers are increasingly price sensitive and there is a great degree of reluctance amongst consumers in purchasing of products and services. Increased credit market policies, the inflow of millions of new entrepreneurs, and high rate of unemployment have significantly the business landscape. Businesses that survived the onslaught of the recent global economic crisis are much weaker and meaner today than they were just a few years ago. Acquiring and maintain the competitive advantage is more difficult than ever for the businesses and mass emergence of e-commerce and internet marketing have totally altered the core of traditional and conventional business practices and now many businesses have turned their focus towards exploring these relatively new horizons. The advent of new millennium marked the beginning of a new era where rapidly changing business atmosphere, technological advancements and recently the worldwide financial turmoil have a great impact on the way businesses are run traditionally. Competitive advantages that have been sustained for so long are now eroding and new ones are emerging. Business firms are now increasingly focused on devising new competitive marketing strategies to gain competitive advantage over their competitors (Freeman, 1984). Strategic planning and marketing divisions of business firms are coming up with new strategies everyday in order to keep pace in the race of competitive advantage. These strategies include market development, retrenchment, market penetration, forward integration, backward integration, horizontal integration, divestiture, liquidation, unrelated diversification and related diversification. These strategies also incorporate many variations which were adopted by different business firms according to their needs and requirements (Ryan, & Jones,. 2009). There are few approaches which can be considered as means to achieve one or more of the strategies. The means or approaches we are concerned with in this paper are first mover and late mover theories.

Discussion

First Mover Advantage

The analysis of the advantage of first mover in a market has been a much studied approach in the last two decades. There have been several reasons why, at least in theory, the ...