Question

1. List several disadvantages of a "First Mover's" Disadvantages. How do you feel they compare to the advantages?

2. Do you feel that Porter's Five Forces and stakeholder analysis is sufficient to define a strategic direction? Why or why not?

Answer 1

Answer 1). Disadvantages of "First Movers"

a). Being First mover is expensive - Research and Development , advertisment and education about new product & getting into a market without harming the legal framework makes First mover expensive.

b). No experience to rely on - When you bring a first mover product in market you will surely make mistakes and you would have nothing to rely on. This is because the mistakes associated with a first mover product and service usually are new to you and new in the market which come only after the launch of that specific product / service.

C). All eggs in a basket - Huge investments in R&D , advertisment and educating the customer about a single product takes huge percentage of your Risk bearing capacity and money , its like having all eggs in a basket if the basket falls , all eggs get broken.

Advantages of "First Mover"

a) Gain switching costs - If the first mover is able to establish itself well in the market , people will think less about moving to another brand. For example Microsoft office products such as MS word,MS powerpoint etc greatly established in consumer market so well that even other operating systems like mac had to ask for development of compatible version of microsoft office.

b) Making their product as industry standard - Product which are launched by first movers set a benchmark of other compititors they also preset industry standard as well.

c) Brand Recoginition - New innovative products have eyes of all the consumers , product innovation can help in brand recoginition and help in gaining brand loyalty.

Answer 2.  No i don't feel Porter's Five Forces and Stakeholder analysis are sufficient to define a strategic direction because both these analysis are limited to simple markets and might not work well in comprehensive markets. Current markets are changing rapidly and both these analysis are specific area based analysis which take huge time and money and other resources.