Strategy Formulation

Strategy Formulation

Introduction

It seems that the first mover advantage is derived from competitive board games such as the chess where player who makes the first move gets an integralplus (Streeter, 1946). Therefore, the first mover advantage is derived from this and it is about using such strategic moves in the organization that there are advantages obtained (Gibbons, 1992). The concept of first mover advantage has found its place in applying in the industrial marketing and management. The aims of company's who enter first in the market want to gain profits and exploiting key areas which followers face some amount of trouble in finding (Montgommery et al. 1997). This paper aims to understand the benefits and disadvantages of the first mover and last mover along with theoretical background of each. Further, we examine which is most appropriate for the firm or company to use.

Discussion

The literature that is available for the first mover in the industry demonstrates that there are number of reasons which come into play which are related to demand and supply. The advantages which are related with demand are the switching costs, network externalities and buyers resistance to change their buying choices whereas supply related advantages include economies of scale and cost reductions that involve learning by doing. Similarly, there are disadvantages too like early entrants may miss an opportunity and use wrong resources and also the technological and market uncertainties that are faced when entering the market are also there. The first mover theories differ in firms, companies, and transport infrastructure in a public organization. It means that a firm which is working in a private environment is highly competitive, whereas transport build up for public may not be pursuing for higher profits and thus, is not competing with others in the market. In recent years there has been the start of a new approach which is called the network science which is an understanding of the advantages due to growth in networks. It is seen that many networks such as the World Wide Web contain certain aspects that are most important than any other thing. It has been pointed that the nodes that are present in the early times in the system have a greater strength such as the connectivity issue.

The important question is that does the first mover advantage really applicable to all kinds of businesses. Let's take the example of Amazon.com which had to make crucial business moves before anyone who entered in the internet selling business. After their entry, there was a huge crowd of followers who wanted to jump in the same business. Thus, according to Barry Parr, an internet analyst said that first mover advantage had become a religion for others in the industry. It is important to seize an opportunity as it comes. The real world examples suggest that a good strategist will examine every way to examine first mover advantage in a business environment. For instance, in setting up a manufacturing plant which can serve a market can become a profitable ...