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CHAPTER 5 • STRATEGIES IN ACTION 161

First Mover Advantages
First mover advantages refer to the benefits a firm may achieve by entering a new market
or developing a new product or service prior to rival firms. 37 As indicated in Table 5-11,
some advantages of being a first mover include securing access to rare resources, gaining
new knowledge of key factors and issues, and carving out market share and a position that
is easy to defend and costly for rival firms to overtake. First mover advantages are
analogous to taking the high ground first, which puts one in an excellent strategic position
to launch aggressive campaigns and to defend territory. Being the first mover can be espe-
cially wise when such actions (1) build a firm’s image and reputation with buyers, (2)
produce cost advantages over rivals in terms of new technologies, new components, new
distribution channels, and so on, (3) create strongly loyal customers, and (4) make
imitation or duplication by a rival hard or unlikely. 38
To sustain the competitive advantage gained by being the first mover, such a firm
also needs to be a fast learner. There would, however, be risks associated with being
the first mover, such as unexpected and unanticipated problems and costs that occur
from being the first firm doing business in the new market. Therefore, being a slow
mover (also called fast follower or late mover) can be effective when a firm can easily
copy or imitate the lead firm’s products or services. If technology is advancing rapidly,
slow movers can often leapfrog a first mover’s products with improved second-genera-
tion products. However, slow movers often are relegated to relying on the first mover
being a slow mover and making strategic and tactical mistakes. This situation does not
occur often, so first mover advantages clearly offset the first mover disadvantages most
of the time. Apple Inc. has always been a good example of a first mover firm.
Strategic-management research indicates that first mover advantages tend to be
greatest when competitors are roughly the same size and possess similar resources. If
competitors are not similar in size, then larger competitors can wait while others make
initial investments and mistakes, and then respond with greater effectiveness and
resources.

Outsourcing
Business-process outsourcing (BPO) is a rapidly growing new business that involves
companies taking over the functional operations, such as human resources, information
systems, payroll, accounting, customer service, and even marketing of other firms.
Companies are choosing to outsource their functional operations more and more for
several reasons: (1) it is less expensive, (2) it allows the firm to focus on its core busi-
nesses, and (3) it enables the firm to provide better services. Other advantages of outsourc-
ing are that the strategy (1) allows the firm to align itself with “best-in-world” suppliers
who focus on performing the special task, (2) provides the firm flexibility should customer
needs shift unexpectedly, and (3) allows the firm to concentrate on other internal value
chain activities critical to sustaining competitive advantage. BPO is a means for achieving
strategies that are similar to partnering and joint venturing. The worldwide BPO market
exceeds $173 billion.
Many firms, such as Dearborn, Michigan–based Visteon Corp. and J. P. Morgan Chase
& Co., outsource their computer operations to IBM, which competes with firms such as
Electronic Data Systems and Computer Sciences Corp. in the computer outsourcing

TABLE 5-11 Benefits of a Firm Being the First Mover
1. Secure access and commitments to rare resources
2. Gain new knowledge of critical success factors and issues
3. Gain market share and position in the best locations
4. Establish and secure long-term relationships with customers, suppliers, distributors, and
investors
5. Gain customer loyalty and commitments