Benefits Of First Mover Advantage

The purpose of this report is to review in detail the literary sources on first mover advantage as a source of sustainable competitive advantage. This process will include a critical examination of the arguments for and against its sustainability in the long term and explore any potential alternatives.

I have chosen this topic to explore whether it is better to be an industry pioneer or an industry follower and in particular, to determine whether being first to a market holds any merit in practice. I hope to use this report as a platform to explore whether it is better to innovate and invent or to build on the innovations of others to achieve a long-term sustainable competitive advantage.

I have examined multiple sources of information,

It will progress to examine the similarities and differences of the arguments and conclude with the determination of which of these is best presented.

Section 2: First Mover Advantage
First mover advantage only occurs when you make money from it. There are plenty of examples of firms who have been first to move and have failed, only for competitors to learn from their mistakes and benefit in the long run.

Lieberman et al (1988) define first mover advantage as the ability of industry leaders to generate profits, but concede that this opportunity can either be capitalised by possessing unique resources or foresight over their competitors or simply luck.

At its simplest, a company can gain a first mover advantage in a number of ways. They can be the first to create a new product, develop a new process or enter into a new market (Kerin et al, 1992). However, there are several key factors that can contribute to a company achieving first mover advantage; sustainable leadership in technology, acquiring of key assets or resources and high switching costs for buyers (Lieberman et al,

They achieve this by breaking down the market in to two categories; the pace of change in technology and the pace of change in technology, determining four possible scenarios and subsequently determining whether any first mover advantage is likely to be “short- lived” or “durable”. These scenarios rely on different sets of capabilities and assets (Suarez et al, 2005),

This framework is useful because it allows one to determine the likelihood of achieving a first mover advantage by analyzing the pace of change in a particular market. It can enable executives to strategically decide, based on their current assets and resources, when to enter and, probably more importantly, when to exit a market. Knowing how long your advantage is likely to last can inform your strategic thinking and perhaps even give you a slight advantage over your competition.

Where they are different (600 words)
Describing the sustainability of the