There are various tactics used by the strategists to accomplish a strategy. These tactics include first mover advantage, outsourcing and reshoring. The management can use any of these tactics depending on the current market scenario.
First Mover Advantage
First mover advantage refers to the benefits achieved by an organization by entering a new market or by creating and launching a new product or service in the market prior to its competitors.
Strategy
What are the Main benefits of Being a First mover?
-
- First mover tactic gives an organization the opportunity to secure access and commitments to rare resources.
-
- Gain market share and position in the best locations.
-
- Gain new knowledge regarding critical success factors and issues.
-
- Helps in establishing and securing a long- term relationship with the customers and suppliers.
-
- Gain customer loyalty and commitments.
First mover advantage helps a firm to achieve an excellent strategic position which empowers it to launch aggressive advertising campaigns and to defend their territory.
When is the First Mover Tactic Most Appropriately Used?
Being a first mover can be an excellent strategy when:
-
- A company wants to build its image and reputation with the customers.
-
- A company wants to produce cost advantages over rivals in terms of new technologies, new components, new distribution channels etc.
-
- A company wants to build a loyal pool of customers.
-
- A company wants to make duplication difficult for any competitor in the market.
How to Sustain the First Mover Advantage Achieved by an Organization?
To sustain the first mover advantage a company needs to be a fast learner, and this involves heavy costs as the company has to spend on new technology and various other resources needed to secure the position. Sometimes, being a slow mover or a fast follower also gives good returns. This kind of strategy is useful if the company belongs to an industry where fast replication of the original product with improved features becomes easy because of the fast-changing technology. Smartphone is one such industry where Apple is mostly the first mover and Samsung, and other mobile companies make use of the fast follower strategy.
First mover advantages work well in an industry where the competitors of the firm are roughly the same size and possess similar kind of resources. If the industry has some large competitors, then the larger ones wait till the other make initial investments for the development of the product and make mistakes. Volkswagen has used this strategy effectively in the recent times.
Outsourcing and Reshoring
Outsourcing refers to the process where the companies hire other companies to perform their important tasks like marketing, sales, HR, Information Systems, Payroll etc. Recently, the companies in the US have been outsourcing their product design o Asian developers. This has made India one of the biggest suppliers of intellectual property all across the world.
What are the advantages of Outsourcing?
-
- It gives access to lower wages in foreign countries.
-
- The companies get a chance to focus more on their core business rather than focusing on the routine management activities of the organization.
-
- Gives access to the talent pool available outside the domestic market.
-
- Provides more capacity for innovation.
-
- Improves Quality of the processes within the organizations as most of the major functions are performed by specialists.
-
- Capitalize on tax incentives to locate manufacturing plants to avoid high taxes in various countries.
Reshoring
Reshoring is used by some of the U.S. firms, when they plan to move a part of their manufacturing back to the United States.
Reasons for Reshoring
-
- Desire to complete customer orders faster.
-
- Reduce transportation and warehousing costs.
-
- Increase number of jobs in the U.S. market.
-
- To improve the quality of intellectual property and to keep it safe.
These tactics can be used by the companies to gain market share or to increase customer loyalty. The management has to analyze the market situation and based on the analysis the correct decision should be taken for the success of the strategy.
