3. Argue that first movers may have higher failure rates. First movers have to bear
the brunt of R&D expenses and may face considerable consumer ambiguity. Sec
ond movers can capitalize on the R&D and marketing efforts of the first mover,
producing a technology that costs less to develop and that corrects for any of t
he first mover’s mistakes.
First movers may also face poorly developed supplier markets, distrib
ution channels, and availability of complementary goods, all of which can increa
se the challenge of successfully launching their new product or service. Enabling
technologies may Nalso be immature, hindering the new technology’s performa
nce.
The biggest disadvantage many first movers face is uncertainty over
customer requirements. Customers themselves may be uncertain about what fea
tures or form they desire in a new innovation. A firm may have to withstand sig
nificant losses before customer preferences become more certain.
5. The first step in establishing a coherent strategy for the firm is assessing the external e
nvironment. Two commonly used models of external analysis are Porter’s five-force model and sta
keholder analysis.
Porter’s five-force model entails assessing the degree of existing rivalry, threat of pote
ntial entrants, bargaining power of suppliers, bargaining power of customers, and threat posed by
substitutes. Recently Porter added a sixth force, the role of complements.
Stakeholder analysis involves identifying any entity with an interest in the firm, what it
wants from the company, and what claims it can make on the company.
To analyze the internal environment, firms often begin by identifying strengths and we
aknesses in each activity of the value chain. The firm can then identify which strengths have the p
otential to be a source of sustainable competitive advantage.
Next the firm identifies its core competencies. Core competencies are integrated comb
inations of abilities that distinguish the firm in the marketplace. Several core competencies may u
nderlie each business unit, and several business units may draw upon the same core competency.
6. Sometimes core competencies can become core rigidities that limit
the firm’s ability to respond to a changing environment.
Dynamic capabilities are competencies that enable a firm to quickly
reconfigure the firm’s organizational structure or routines in response to chang
e in the firm’s environment or opportunities.
A firm’s strategic intent is the articulation of an ambitious long-term
(10 to 20 years out) goal or set of goals. The firm’s strategic intent should build
upon and stretch its existing core competencies.
Once the firm articulates its strategic intent, managers should identi
fy the resources and capabilities that the firm must develop or acquire to achie
ve its strategic intent.
The balanced scorecard is a measurement system that encourages t
he firm to consider its goals from multiple perspectives (financial, customer, bus
iness process, and innovation and learning), and establish measures that corres
pond to each of those perspectives.
7. REFERENCE
P. Golder and G. Tellis, “Pioneer Advantage: Marketing Logic or Marketing Legend?” Jo
urnal
of Marketing Research 30 (May 1993), pp. 158–70.
W. Robinson and M. Sungwook, “Is the First to Market the First to Fail? Empirical Evide
nce for Industrial Goods Businesses,” Journal of Marketing Research 39 (2002), pp. 120–28.
M. Lieberman and D. Montgomery, “First Mover Advantages: A Survey,” Strategic Mana
gement Journal 9 (1988), pp. 41–58.
Ibid.; and M. Spence, “The Learning Curve and Competition,” Bell Journal of Economics
12 (1981), pp. 49–70.
Diamond, “The Curse of QWERTY,” Discover 18, no. 4 (1997), pp. 34–42.
P. A. David, “Clio and the Economics of QWERTY,” American Economic Review 75 (1985)
,pp. 332–38.
Diamond, “The Curse of QWERTY.”
8. REFERENCE
G. Hamel and C. K. Prahalad, “Strategic Intent,” Harvard Business Review, May–June 199
1, pp. 63–76.
C. K. Prahalad, “The Role of Core Competencies in the Corporation,” Research Technolo
gy Management, November–December 1993, pp. 40–47.
M. A. Porter, Competitive Strategy. (New York: Free Press, 1980).
Michael Porter is fully supportive of both ways of applying the five-force model. Perso
nal communication with Michael Porter, March 25, 2006.
M. A. Porter, “Strategy and the Internet,” Harvard Business Review 79, no. 3 (2001),
pp. 62–78; and personal communication, March 13, 2006.
M. A. Porter, Competitive Advantage (New York: Free Press, 1985).
J. Barney, “Firm Resources and Sustained Competitive Advantage,” Journal of Managem
ent 17 (1991), pp. 99–120.
R. Reed and R. J. DeFillippi, “Causal Ambiguity, Barriers to Imitation, and Sustainable C
ompetitive Advantage,” Academy of Management Review 15, no. 1 (1990), pp. 88–102.