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Strategic Planning: The First Mover Advantage Essay

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Updated: May 22nd, 2021

The “first mover” phenomenon, defined as a situation where a company enters a previously unoccupied field, confers a variety of advantages and disadvantages on the organization in question. However, the definition is somewhat unclear, as, for example, Apple is not the first company to introduce a smartphone. Nevertheless, it enjoys all of the benefits of being a first mover because the iPhone was the first successful smartphone model.

Cases where companies failed because they were first movers who did not succeed while a later follower became the industry leader also deserve mentioning. Leonard and Pilarski (2018) analyze the reasons why large companies such as Douglas, DeHavilland, Avro, and Sud-Aviation did not survive the transition into the era of jets despite staying at the cutting edge of technological progress. Some failures were technical, others were due to a lack of trust and popularity, and Boeing was able to avoid the mistakes of its predecessors and dominate the aircraft industry.

The financial advantages and disadvantages of being a first mover are the subjects of considerable debate about whether they justify the risks. Tsuchihashi and Hamada (2014) claim that the distinction benefits the company in the majority of cases, but they admit that the findings display considerably higher results than prior literature. Regardless, the first mover advantage comes with high danger, even according to the most optimistic estimates.

The establishment of a first mover advantage does not require the opening of a new company or the debut of a new product line. According to Hirose, Lee, and Matsumura (2017), companies that implement initiatives such as corporate social responsibility before others enjoy a price advantage on the market. This tendency may be due to the perception of the followers as copycats and therefore less ethically commendable, as, unlike with products, consumers struggle to compare the quality of different social responsibility initiatives.

References

Hirose, K., Lee, S. H., & Matsumura, T. (2017). Environmental corporate social responsibility: A note on the first-mover advantage under price competition. Economics Bulletin, 37(1), 214-221.

Leonard, J. S., & Pilarski, A. (2018). . Web.

Tsuchihashi, R., & Hamada, T. (2014). A systematic assessment of first-mover advantages. Web.

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IvyPanda. (2021, May 22). Strategic Planning: The First Mover Advantage. Retrieved from https://ivypanda.com/essays/strategic-planning-the-first-mover-advantage/

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"Strategic Planning: The First Mover Advantage." IvyPanda, 22 May 2021, ivypanda.com/essays/strategic-planning-the-first-mover-advantage/.

1. IvyPanda. "Strategic Planning: The First Mover Advantage." May 22, 2021. https://ivypanda.com/essays/strategic-planning-the-first-mover-advantage/.


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IvyPanda. 2021. "Strategic Planning: The First Mover Advantage." May 22, 2021. https://ivypanda.com/essays/strategic-planning-the-first-mover-advantage/.

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IvyPanda. (2021) 'Strategic Planning: The First Mover Advantage'. 22 May.

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