First vs. Late Mover Theories: a Comparison

Running head: Power: First vs. Late

First vs. Late Mover Theories: A Comparison

Stacey Redd

American Intercontinental University Online

MGT 680 IP3

Abstract

The following report will discuss the differences between first-mover and late-mover theories. It will also compare the advantages and disadvantages of both of the theories as well as provide examples of each. Ultimately reporting a recommendation of which theory is the best to use based on what a firm is trying to accomplish within a given marketplace.

First vs. Late Theories: A Comparison

There are many advantages and disadvantages for both the first-mover theory and the late-mover theory. Yet, it is the general remaining advantage, or the variation among disadvantage and advantage, that determines a business’ market performance (Frawley & Fahy, 2006). First mover advantage is a distinctive kind of competitive advantage that results from early market entrance timing. After market entry, first-mover advantage takes place in the time of narrow competition and improved profitability benefited from by the innovating firm. Sometimes these advantages are because of the unfavorable influence on the profitability of a follower firm because of the strategic position of the innovating firm. Late-mover advantage happens when a firm follows the lead of a first-mover and essentially attains a larger market share, even though they entered the market second or late.

First-mover Theory

Advantages

First-mover advantages come from four main resources, leadership in technology, preemption of material goods, purchasers changing rates and buyer choice uncertainties. A business can get first-mover advantage by being technological leader. They can then keep this advantage by getting patents and copyrights to their product and process or keeping them as trade secrets.

Another advantage is the preemption of goods, which means to have access to a product or resource before another firm. This can also apply to...