Advantages of Early-Movers and Companies That Define New Markets
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There are numerous advantages that come with being the “first-mover” and defining a new market or new frontier, centered around dominant designs and competitive dynamics. The initial battle between different designs that occurs at the outset is, at its core, a competition for the market, and a determination for what kind of market will be brought into being. Companies that win the initial competition in providing the dominant design for a new market are well placed to take control of the market that their design inherently defines and brings into existence. Furthermore, the company can utilize their early foothold in the market to traverse learning curves quickly and take advantage of scale economies, which subsequently enables them to achieve cost advantages against players that enter the market later on. The early-mover can also integrate comprehensively across the value chain and gain strategic positions, as well as obtain jurisdiction over key assets and inputs that new market entrants will have to then compete for. These early companies will also have an immense advantage among their consumers - they can be first to building relationships with consumers and cementing their brand name in the space. The first company is the one that created the market intrinsically, and this context is a premium to their reputation that no other industry player that enters thereafter can secure. These advantages of being the first company that creates the market in the first place are immense and can govern the trajectory of the company over time. It’s part of the reason why Ford is still a player in the automaker space even though practically all of its competitors that entered subsequently in the early 1900s are no longer existent.