Strategic Formulation

Abstract

As much as the first mover theory seems apparently beneficial, it has its own disadvantages in contrast to the late mover theory. A firm should heavily weigh the pros and cons of both before pursuing either strategy.

Abstractii

Introduction1

Discussion1

First Mover Theory1

Disadvantages1

Successful First Movers2

Unsuccessful First Movers2

Late Mover Theory3

Advantages3

Disadvantages3

Successful Late Movers4

Unsuccessful Late Movers5

Conclusion6

References7

Introduction

The management team has called in a meeting and as a consultant I have been assigned the responsibility of recommending either the first mover or the late mover approach. Included in this report is an evaluation of both the strategies. It concludes with a suitable recommendation for the company.

Discussion

First Mover Theory

Advantages

There are a number of advantages that first movers enjoy:

Their name gets recognized in the markets;

They can patent their product;

Resources are available because market is unsaturated;

There is an easy opportunity to gain a huge market share (Carpenter & Kakamoto, 1986).

Disadvantages

As much as first movers enjoy unused advantages, they also face some risks, such as:

Firms might come to face unexpected or unanticipated costs;

Long-term profits are not ensured;

Uncertainty of markets and the risk for product failure;

Second and late movers have the time to capitalize on the first mover's weaknesses.

Successful First Movers

A number of firms have achieved success using the first mover theory. These include:

Apple, Inc.

The firm has been continuously been an icon of innovation by introducing amazing products such as the iPad, iPhone, and more recently, the iPad. It has also been integrating its hardware with relative services such as the iTunes web store.

EBay

The company was the first to create the online buying and selling forum (David, 2007).

Intel

The company created the first microprocessor chip for commercial use in 1971.

Procter & Gamble

P&G was the first firm to bring the concept of disposable diapers.

Unsuccessful First Movers

A number of firms have made failed attempts to capture the market as a first mover:

Chux disposable diapers

The Company launched the idea of disposable diapers in 1949, but failed due to the fact that its capacity was only 100 milliliters.

America Online (AOL)

America Online tried to bring a revolution in the field of internet browsing in the early 1980's, however; it failed largely because it could not keep up with the changing consumer demand and the ever changing nature of the online industry.

Creative Technology, Inc.

It was the first company to create an mp3 player. However, it did not succeed as Apple took the idea and turned it into its successful iPod.

Motorola

The company was one of the very first pioneers in ...