The managers of your company are deciding whether to develop a brand new product not yet seen in the marketplace or a version of a competitor’s product that has already been launched into the marketplace.
Management has called a meeting to discuss which way to go. They want to know if they should follow the “first-mover” or “late-mover” theory. You have been assigned the task to develop a presentation for this meeting that will give evidence that either supports or disagrees with these theories. You may use the Cybrary or other Web resources to find more information on these terms as well as examples to support your position.
I want to develop the later-mover theory and develop a version of a competitor’s product that has already been launched into the marketplace.
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Solution Preview
There are three factors in the area of first-mover disadvantage, two of which translate directly into late-mover advantages:
1) free-rider effects,
2) resolution of uncertainty, and
3) first mover inertia.
Free-Rider Effects
If the technology or products developed by first mover are protected through patents and difficult to replicate, late-movers may find it difficult to catch up and compete. However, in the absence of patent protection or barriers to knowledge diffusion, this would-be first-mover advantage becomes a late-mover advantage. Highly mobile work force, reverse engineering, etc may lead to leak of knowledge from first mover to the late movers. If firms do …
