Preemptive strategies involve moving first to secure an advantageous position
that rivals are foreclosed or discouraged from duplicating. There are several
ways to win a prime strategic position with preemptive moves:13
• Expand production capacity ahead of market demand in hopes of
discouraging rivals from following suit. When rivals are "bluffed" out
of adding capacity by a fear of creating long-term excess supply and
underutilized plants, the preemptor can win a bigger market share if
market demand grows and its own plant capacity fills.
• Tie up the best (or the most) raw material sources and/or the most
reliable, high-quality suppliers via long-term contracts or backward
vertical integration. This move can relegate rivals to struggling for
second-best supply positions.
• Secure the best geographic locations. An attractive first-mover advantage
can often be locked up by moving to obtain the most favorable site along
a heavily traveled thoroughfare, at a new interchange or intersection,
in a new shopping mall, in a natural beauty spot, close to cheap
transportation or raw material supplies or market outlets, and so on.
• Obtain the business of prestigious customers.
Preemptive strategies involve moving first to secure an advantageous positionthat rivals are foreclosed or discouraged from duplicating. There are severalways to win a prime strategic position with preemptive moves:13• Expand production capacity ahead of market demand in hopes ofdiscouraging rivals from following suit. When rivals are "bluffed" outof adding capacity by a fear of creating long-term excess supply andunderutilized plants, the preemptor can win a bigger market share ifmarket demand grows and its own plant capacity fills.• Tie up the best (or the most) raw material sources and/or the mostreliable, high-quality suppliers via long-term contracts or backwardvertical integration. This move can relegate rivals to struggling forsecond-best supply positions.• Secure the best geographic locations. An attractive first-mover advantagecan often be locked up by moving to obtain the most favorable site alonga heavily traveled thoroughfare, at a new interchange or intersection,in a new shopping mall, in a natural beauty spot, close to cheaptransportation or raw material supplies or market outlets, and so on.• Obtain the business of prestigious customers.
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