The first mover in a market segment has the advantage of gaining control of the resources that a follower may not be able to match. In addition, the mover gains in terms of technological leadership, preemption of scarce assets and switching costs in the event of uncertainty. The disadvantages of a first mover include free rider effects, resolution of technological or market uncertainty, inertia of the incumbent and shifts in technology of consumer tastes.
The first mover may be superior to the follower in the event when he gets full access to the technological system that controls industry operations and control of the key assets in an industry. An example is in the case of software generation. The follower, on the other hand, may have an advantage over the first mover in the event that there are drastic changes in the tastes and preferences of consumers. The follower will not suffer from product modification costs. An example is in the case of mobile phone industry, where consumers tend to change their preferences frequently.
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The end customer plays a significant role in the product design and development process. First, the end customer determines the pricing of a product in terms of the purchasing ability. Secondly, the end customer determines the components of the products in terms of the consumer tastes and preferences. Some end customers are aware of what they want in terms of product specification. However, a majority will settle on the product that is friendly to the prevailing financial condition of the product.
Global strategy is an approach where companies compete on the global scene. Same companies compete with each other across the globe. Multi domestic strategy means companies competing in every national market independently of the other national markets. A multinational approach is one where firms are located in several countries and provide the same products. Lastly, there is the domestic approach where firms establish themselves locally.
A global strategy allows companies to compete everywhere, and appreciate the demands of success in every part of the world. This approach has such advantages as Economies of scale due to production of same products across all countries, low costs compared to the other approaches, easy coordination of activities and fast product development.