Bt Business Management, Uk

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Faculty of Management and Business Technology

Centre for Post Graduate Programme

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Question one: As the first to set up telecommunication infrastructures, systems, and services in the United Kingdom, BT is recognized as a first-mover in the telecommunication industry. Discuss advantages and disadvantages of being a first mover like BT

ADVANTAGES:

Being a first mover in a service company can be very advantageous.  Regardless of what field the company is in, being a first mover means gaining all resources available before any other company gets in there. Being a first mover gives a company the advantage by gaining customer loyalty and providing services that were not available before them. Also creating a positive first impression can lead to brand recognition. They also have the luxury of tweaking their service to fit consumer needs while competitors would still be developing their service. Finally, if they work quickly and offer a quality product, the first-mover company could build relationships and secure key contracts and locations before another company is able to compete. Below are some of the advantages of being a first mover;

• Positive feedback: BT as the first mover has an opportunity to exploit network effects and positives feedback loops, locking consumers into its technology
• Brand name: The first mover may be able to establish significant brand loyalty, which is expensive for later entrants to break down. Indeed, if the company is successful in this endeavour, its name may become closely associated with the entire class of products or services, including those that produced by rivals
• Capture maximum market share: The first mover may be able to ramp up sales volume ahead of rivals and thus reap cost advantages associated with the realization of scale economies. With cost advantages, first mover can respond to new entrants by cutting prices to hold onto its market share and still earn significant profit
• Switching costs: the first mover may be able to create switching costs for its customers that subsequently make it difficult for rivals to enter the market and take customers away from the first mover. Wire service providers for example, will give new customers a ''free'' wireless phone, but customers must sign a contract agreeing to pay for the phone if they terminate the service contract within a specified time period, such as a year. Because the real cost of a wireless phone may run from RM 200 to RM 300, this represent a significant switching cost  that later entrant have to overcome
• Technological leadership: the first mover may be able to accumulate valuable knowledge related to customer needs, distribution channels, product technology, and process technology and so on. This accumulated knowledge gives it a knowledge advantage that later entrant might find difficult or expensive to match. Sharp, for example, was the first mover in the commercial manufacture of active matrix liquid crystal displays (LCDs) used in laptop computers. The process for manufacturing these displays is very difficult, with a high reject rate for flawed displays. Sharp has accumulated such an advantage with regard to production processes that it has been very difficult for later entrants to match it on product quality, and thus costs.

DISADVANTAGES:

Being the first of an industry does not always translate to success. There are several disadvantages to being a first-mover. First movers have the challenge of entering marking and developing for success, whereas a following company can use them as an example and exploit their experience. The later entrant company can also use the mistakes of the first mover to their advantage and adjust their company to avoid those mistakes without as much setback. First movers may have invested heavily to open their market and could be more resistant to change or invest in new technologies. In contrast, a following company may have more flexibility to adapt and change compared to the first mover. Nevertheless, a major risk for the first mover is the uncertainty that this new created market will be successful and could have the potential of monetary failure. Below are some of the disadvantages of being a first mover;

• Expensive and time-consuming: BT being the first mover has to bear significant pioneering cost that later entrant does not. The first mover has to pioneer the technology, develop distribution channels, and educate customers about the nature of their product and services. All of this can be expensive and time-consuming. Later entrants, by way of contrast, might be able to free-ride on the first mover's investment in pioneering the market and customer education
• Uncertainties in a new market: The movers are more prone to make mistakes because there are so many uncertainties in a new market. Later entrants may be able to learn from the mistakes made by first movers, improve on the products and services or the way in which it is sold, and comes to the market with a superior offering that captures significant market shares from the first mover
• Risk: The first mover runs the risk of gearing its resources and capabilities to the needs of innovators and early adopters and not being able to switch when the early majority enters the market. As a result, first movers run a greater risk of plunging into the chasm that separates the early market from the mass market

Question two: Compare and contrast being a first mover in a service sector (e.g., telecommunication and in a manufacturing sector (e.g., SONY or AIRBUS) Discuss opportunities and threat for first mover in each sector.

Being a first mover is just as advantageous for service companies as it is for manufacturing companies. First movers in Service and manufacturing sectors face many similar issues that affect the end result of the operation. For example, both face issues of cost control. Manufacturing operations must find suppliers of raw materials at the lowest cost and highest quality possible when moving into a new market. Likewise, service operations' indirect cost of providing services must be kept low so that the organization can provide competitive prices to customers and still turn a profit. First mover in Manufacturing sector produce tangible goods, which are physical products that can be held and seen, while first mover in service sector  provide certain intangible services that may not be easily identifiable.