When to make a strategic move is often as crucial as what move to make. Timing
is especially important when first-mover advantages or disadvantages exist.22
Being first to initiate a strategic move can have a high payoff when (1) pioneering
helps build a firm's image and reputation with buyers, (2) early commitments
to supplies of raw materials, new technologies, distribution channels,
and so on can produce an absolute cost advantage over rivals, (3) first-time customers
remain strongly loyal to pioneering firms in making repeat purchases,
and (4) moving first constitutes a preemptive strike, making imitation extra
hard or unlikely. The bigger the first-mover advantages, the more attractive
that making the first move becomes.
However, a "wait and see" approach doesn't always carry a competitive
penalty. Making the first move may carry greater risks than a late move. Firstmover
disadvantages (or late-mover advantages) arise when: (1) pioneering
leadership is much more costly and only negligible experience curve effects
accrue to the leader, (2) technological change is so rapid that early investments
are soon obsolete (thus allowing following firms to gain the advantages of nextgeneration
newest products and more efficient processes),