ANSWERS CHAP 6

1. A first mover is a service or product that have competitive advantage by being the first to
market. First mover advantages:
 The opportunity to pre-empt competitors and capture demand by building a
powerful brand name.
 The ability to build up sales volume in that country and ride down the experience
curve ahead of rivals and gain a cost advantage over later entrants.
 The ability to generate switching costs that connect consumers to their goods or
services makes it difficult for future entrants to win market.

2. Pioneering cost
 Pioneering is a cost that the early entrants have to bear whereas future entrants can
avoid. It arises when the foreign business system is not as the same as the home
market which the firm must offer considerable time, expenses and effort to learn
the rules.

3. Consequences of an international firm entering a foreign market on a significant scale.

 It is related with the value of the resulting strategic commitments. Strategic
commitments have a long-term impact and hard to reverse. Besides, strategic
commitments will influence the nature of competition in the market. Furthermore,
they tend to change the way competitive were held and release lots of changes
which may be desirable or not. Next, large scale entrants will be able to capture first
mover advantages associated with pre-emption, demand, scale economies and
switching costs.