Which of the following is a disadvantage of first movers?
A) They cannot establish significant brand loyalty due to high costs.
B) They cannot create switching costs for their customers, thus making it difficult to enter the market.
C) They decrease sales volume compared to their rivals, and thus operate at a loss.
D) They run the risk of building the wrong resources and capabilities.
E) They do not have the power to exploit network effects and positive feedback loops.

Question

Quizplus · Accepted Answer

First movers run the risk of building the wrong resources and capabilities, which could make it difficult for them to adapt to changing market conditions or customer preferences. The other options are not necessarily disadvantages of first movers. For example, first movers often have the advantage of establishing significant brand loyalty and creating switching costs for their customers. They may also be able to exploit network effects and positive feedback loops to their advantage.

Which of the Following Is a Disadvantage of First Movers