ibusweek8-9 - LISA YANG IBUS20002 Business in the Global Economy EARLY ENTRANT First player in the market with a new product and first to break into a

ibusweek8-9 - LISA YANG IBUS20002 Business in the Global...

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LISA YANG IBUS20002 Business in the Global Economy EARLY ENTRANT LATE ENTRANT First player in the market with a new product and first to break into a particular market segment or geographical area Early entrant status is not an end in itself but rather the beginning of a long complex strategy in which the initial advantage has to be defended against latecomers in order to stay ahead of the competition Early entrant with a distinctive presence in the marketplace need to be in a position to react or even better, anticipate potential entrants and increase barriers to latecomers. Early entrant may be in a position to reduce its price and decrease the value of the business for a late entrant or it can block entrance entirely by controlling key distribution channels Usually the second player entering into the market with improved product and service / by imitating the early entrant. Late entrants have been working along the same lines but are slightly later or have an adopted a deliberate policy allowing the first in the company to test the market Late entrants are often able to capture a large market share despite following the early entrant by learning from their mistakes. Works well if the firm has superior marketing or enough resources to compete weaker late entrants may find themselves continually following the early entrant Advantages A competitive edge gained by being the first to introduce a product or service in the new market Opportunity to seize the best market places Technological leadership / cost advantages Change to build brand loyalty Scope to create barriers to entry Enhances reputation / image Scope for creating a lead which others have to follow Advantages: Have lower R&D costs Able to learn from the mistakes of the early entrant Have lowering marketing costs as the public have been educated about the new type of product able to focus on making superior product and to dominate the market Able to polish the design and capture a large market share Can occupy a previously unoccupied niche in the market Lower risks and greater chance of returns from investment Disadvantages Cost of pioneering can be high: technology, R&D, establishing distribution channel, marketing know-how Carries greatest risk in terms of possible failure in the new market Loyalty of first time buyers is often weak Innovators products are primitive and may not live up to expectations Rapid technological change allows followers to take advantage Skills and know-how of early entrants may be easily imitated Disadvantages Barriers to entry see ‘advantages’ of first mover
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LISA YANG IBUS20002 Business in the Global Economy Reasons for internalization Resource seeking Access to resources of various kinds; securing key supplies (oil, minerals, labour); more recently: technology/knowledge of any kind Market seeking access to more consumers Efficiency seeking
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