PART A – ANSWER 1

Timing of an entry into a foreign market is important management decision. Discuss

advantages and disadvantages of being the first move into a market.

The First mover can be described as the entering in to a foreign market as a fresher (new comer)
with a product or service before any other competitor or similar company enters in to it. The
main objective of the first mover is to gain a sustainable competitive advantage by establishing
themselves over the competitors enter the market later.
However there are advantages and disadvantages in that management decision based on the
country, economic situation, financial strength and several other factors.

Advantages of First Mover Strategy

 This will lead the company to develop a strong brand name among the customers. Since
there is no other competitor in the market. Celtel became a strong brand name among the
customers of the telecommunication market since it became 1 st to enter in Sri Lankan
Market out of the similar companies. Also Coca Cola too has won a excellent brand name
among the Sri Lankan beverage market due to its first mover strategy out of the foreign
companies, though the big local brand name Elephant House was there in the market.

 First movers have the opportunity of acting as a monopoly characteristics up to certain

time before any other company comes to the market. At that particular period the
company can earn maximum percentage of the sales.

 First mover has the time to experiment, make ideal strategies to make the products and its
distribution and sales.

 Also they have the opportunity of signing contracts with suppliers, talented employees
and agents for exclusive partnerships which prevent others to do so.

 First movers have the opportunity of dominating the market when instances where high
cost involves to customers to switch with a rival brand later. (Eg: Customers are reluctant
to change to Peo TV once they have bought the Dialog TV due to the high cost involve to
register)
Disadvantages of First Mover Strategy

 Being the first is expensive. Since there is no early guidance of the market, its
environment and behaviour should be analysed. First Mover has to start from the
beginning of its proceedings. Therefore the First Mover has to create a market, do the
experiments, must do the product awareness and publicity etc which make huge cost. The
companies who enter to the market can follow the write ways of First Mover with less
cost.

 There might be a possibility of threats of modification of the existing product and sale to
at low cost by the late comers since there initial cost is low as against the First Mover.

 Due to the possibility of using new technology by the new comers at the beginning it is
disadvantage to the First Mover who used to stick with old technology.

 Regulatory resistances may be arisen. As player goes first to the market, it needs to focus
on all social and legal related policies and regulations to adhere where later players so not
have to face them alone.