Which of the following statements is true of first movers relative to early followers and late entrants?
A) Cost of developing necessary production processes and complementary goods is lower for first movers.
B) First movers are in a better position to exploit buyer switching costs and also to reap increasing returns advantages.
C) First movers, being incumbents, have greater ability than later entrants to respond to changes in the industry environment and adopt newer production processes.
D) First movers fail to capture scarce resources such as key locations, government permits, access to distribution channels, and relationships with suppliers.

Question

Quizplus · Accepted Answer

First movers have an advantage in exploiting buyer switching costs and reaping increasing returns advantages. However, the cost of developing necessary production processes and complementary goods can be higher for first movers, and they may also fail to capture certain scarce resources like key locations, government permits, access to distribution channels, and relationships with suppliers. While being an incumbent can provide some advantage in responding to changes in the industry environment and adopting newer production processes, it is not necessarily a unique advantage of first movers.

Which of the Following Statements Is True of First Movers