Better growth decisions: early mover, fast follower or late follower?

Abstract

Purpose

The article seeks to explain how companies seeking to fuel growth by entering new markets should analyze when it is wise to be an early mover, fast follower or late follower. Each option requires a different competitive strategy.

Design/methodology/approach

The paper observes how three companies used early mover advantage to cement leadership in certain markets. It then suggests what approaches and industry circumstances allow fast followers and late followers in other settings to triumph.

Findings

The paper reveals that to chart potential strategies, managers should determine where their enterprise fits among three general types of business models: Solution shops like niche scientific instrument makers and customized software application developers create specially made offerings. They often dominate at the early stage of an industry. Value‐chain business models organize companies like automakers into systems that promote efficiency, consistency, market power, and access to sales channels. Facilitated‐network businesses like Facebook reap their competitive advantage from the size of their network.

Practical implications

Early movers win only when a company can: preserve an early market lead stemming from barriers that later entrants will face; build resources and competencies that larger firms eventually could imitate but which they will prefer to acquire; avoid becoming locked into inappropriate technologies or business models before the market is deeply understood; and avoid incurring large upfront costs.

Originality/value

Once a company defines what new business it wants to be in, it can use this paper to help identify the advantages and drawbacks associated with entering the industry at different times.

Citation

Wunker, S. (2012), "Better growth decisions: early mover, fast follower or late follower?", Strategy & Leadership, Vol. 40 No. 2, pp. 43-48. https://doi.org/10.1108/10878571211209341