Question: “Proponents of new trade theory argue that competitive advantage is rooted in the first-mover advantage and is enduring. By contrast, critics argue that first mover advantage is a myth. Critically evaluate this debate.”
Through the analysis of the Personal Stereo Industry and the VCR/DVD/Blu-Ray Industry it is clear that first-mover advantages do not lead to sustainable economic advantages. In the Personal Stereo Industry, the interplay between the pioneering companies, Saehan and Pontis and the entry of Apple illustrate that first-mover advantages are in fact futile, while factors such as product innovation, distribution capacity and access to international markets are the true contributors in developing economic advantages. Similarly, thorough coverage of the VCR/DVD/Blu-Ray industry demonstrates that cheaper production costs and product suitability to consumers are the main factors that allowed JVC to attain economies of scale and thus competitive advantages.
Proponents of New Trade Theory (“NTT”) suggest that all competitive advantages are deeply rooted in first-mover advantages. This essay will look to evaluate this statement and present a contrasting view through the analysis of the personal stereo and video recorder industries. It will present cases from both industries and present the argument that economic factors other than first-mover factors, namely factor endowments, innovation and cheap production capacity that lead to sustainable and long term competitive advantages. It will justify the stance taken by implementing certain theoretical frameworks and analysing how they affect the individual industries
3. Personal Stereo Industry:
Proponents of NTT state that pioneering companies who are first-movers in any given industry are likely to gain significant competitive advantages. Through the case study of Saehan, a Korean information systems company, Pontis a small German start-up company and the...