First Mover Advntage is Myth

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THE FIRST MOVER

ADVANTAGE IS MYTH Presented

ByP.Sudhakara

Reddy

19/03/2010 IIPM-BUSINESS POLICY



Some Research FactsThe failur e rates of pion eer s as of 2000 i s quit e high - 64% for all indu stries studi ed.

For t he 42 traditional indu stries studi ed, the failur e rate was 71%; for high-tech indu stries, 50%.In 2000, t he fir st mov er s in t he 66 indu stries hadan av erag e mark et shar e of only 6%.

Early follow er s averag ed almo st 3x t he mark etshar e of t he pion eer s.

Sour ce:W ill and Vi sion by G erald Te llis (Univ er sity of Sout hern California)and P eter Gold er ( New York Univ er sity)

19/03/2010 1IIPM-BUSINESS POLICY



W hy People Believe that first movers

have advantage??

The mark et oft en per ceives fir st mov er s as having

advantag es because it has mis per ceived w ho wa s fir st.

--The fir st mov er in t he dis po sable diap er mark et wa s Chux. P&G didn't com e on t he sce ne until 30 y ear s later but b ecause Chux di sapp ear edhistory wa s r einterpr eted and P&G w er e thoug htof a s the fir st mov er.




Success of leaders and followersPRODUCT INNOVATOR FOLLOWER WINNERAirliners De Havilland (Comet) Boeing (707) Follower Float glass Pilkington Corning Leader X-Ray Scanner EMI General Electric Follower Office P.C. Xerox IBM Follower Cricket League ICL IPL Follower Diet Cola R.C. Cola Coca Cola Follower Instant Cameras Polaroid Kodak Leader Pocket Calculator Bowmar Texas Instruments Follower Microwave Oven Raytheon Samsung Follower Plain Paper Copiers Xerox Canon Not clear

Fiber Optic Cable Corning many companies Leader Video Games Players Atari Nintendo/Sega/Sony Follower Disposable Diapers Chux Proctor & Gamble Follower Web browser Netscape Microsoft Follower PDA Psion, Apple Palm Follower MP3 music players Diamond Multimedia Sony (&others) Follower




First Mover vs. Late Movers

Hill, C , & Jones , G. Strateg ic Management ³An Integrated Approa c h´




First-Mover Disadvantages ± H igh r ese ar ch and d evelopm ent expenses

Fir st mov er s pends mon ey on exploratory r ese ar ch that r esults in failur e befor e achieving success as wellas developing compl ementary good s and a mark et

± Und eveloped supply and di stribution chann elsA new-to-t he-world t ech nology oft en has noappropriat e suppli er s or di stributor s. The fir st mov er has to d evelop and produ ce on t heir own or a ssistother s in the developm ent and produ ction of t he needed suppli es




First-Mover Disadvantages-Immatur e enabling t ech nologi es and

compl ementsPDA develop er s had cr eated useful palm-

size devices but t he batt ery and mod emtech nologi es needed to support t he PDAs was not d evelop ed enoug h

-Un certainty of custom er r equir ements-Kodak introdu ced the 8mm vid eocamera expecting a larg e numb er of custom er s due to it s design and quality.




Dilemmas of First Movers

1. H ow mu ch improv ement do es the innovation provid e over pr eviou s solution s?

2. Does the innovation r equir e enabling t ech nologi es,and ar e these tech nologi es suffi ciently matur e?

3. Do compl ementary good s influ ence the valu e of theinnovation, and ar e they suffi ciently availabl e?

4. H ow high is the thr eat of comp etitiv e entry ?




Dilemmas of First Movers

5. Can t he firm wit hstand early lo sses?

6. Does the firm have r esour ces to acce leratemark et acce ptan ce?

7. Is the firm¶s r e putation lik ely to r educe theuncertainty of custom er s, suppli er s, anddistributor s?




Ju st Look At S

uccessf

ul Companies

The r eal causes of enduring mark et leader ship ar evision and will.Enduring mark et leader s have a r evolutionary andins piring vi sion of t he mass mark et, and t heyexhibit an indomitabl e will to r ealiz e that vi sion.

The y per sist und er adv er sity, innovat e r elentless ly,commit finan cial r esour ces and l everage asse ts tor ealiz e their vi sion.




QUERIES?

19/03/2010 IIPM-BUSINESS POLICY

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First Mover Advntage is Myth