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A first mover can create a new market and dominate it because the first mover has created the need or want for the product. A first mover that creates a new market is not threatened by competitors entering the market later.Instead of competing against Barnes & Noble for the digital reading market, for example, Amazon created the market by selling e-books to begin with, and then also selling the Kindle, its e-book reader. Create a new market instead of going after the existing one.The Kindle was the first e-reader on the market, but Amazon continually improved the product by adding features and lowering the price until it beat out its competition. The Amazon Kindle is a prime example of this strategy. The first mover can enter a new market with a product as good as or better than the competition, and then improve upon it until it wins over the customers. By constantly improving your product, the product will stay ahead of the competition, but–just like the me-too car salesman–at a lower price. A successful strategy involves “me-too” improvements.If Apple comes out with a new, faster iPhone, improve upon it by having an even faster, or even better, phone. Innovate first, and then stay ahead of the competition by constantly improving your product.The first mover can take three strategies: The Nook (from Barnes and Noble) and the BlackBerry are examples of first movers that failed because they were unable to maintain the lead in their respective industries. But not every attempt to be first is successful. The goal of a first mover is to become the dominant supplier in the industry by being the original inventor of the technology, product, or service offering. This is because a first mover has to tolerate the high costs of pioneering and may commit substantial mistakes that later entrants into a market may be aware of and be able to avoid.Disadvantages of Being a First Mover What is First Mover Strategy? However, fast followers may possess sufficient resources to overtake first movers in some cases. Making a first move is an offensive strategy to used to secure an advantageous position over a rival. However, the chance of overpayment also increases. The likelihood that a bidding firm will acquire its target increases when it has acquired a toe-hold in the target firm. Buyers tend to remain strongly loyal to pioneering firms. A first move is a preemptive strike that helps build up a firm’s image and reputation with buyers and can result in cost advantage over rivals. Mergers and acquisitions are often driven with strategic advantages such as expansion of a firm’s geographic coverage or extension of its product range. As capital resources are limited, firms can gain first-mover advantage by promptly screening the competitive landscape, the deal’s value and their target’s business with evaluation criteria in place.
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Acquisition performance is higher for early movers as compared to acquirers that enter the market at the height of an acquisition wave. Firms eager to cut a profitable deal cannot take a wait-and-see approach. Entering a new market can help a firm create value. Mergers and acquisitions are strategic moves that can assist a firm in speedy growth. Divestopedia Explains First-Mover Advantage