Risk associated with being first mover(entry order). 1. Being overtaken by 2nd mover Facing market risk – market not formed yet
Customer uncertainty and extended time for adaptation
Charles Stack 1st online book store lost its market share for Amazon.com invest highly in R&D and marketing cost Follower strong product positioning, pricing and heavy promotion firm has to be aware of fast, aggressive and imitating followers that will neutralize all the firm’s efforts and investments and decrease firm dominance cost of imitation is only about 65% of the cost of innovation market development, competitive actions and technological development it is not easy to shape industry conditions have to be taken into account Mauborgne …show more content…

For that reason, competition is already the benchmark by definition. Competitive actions also give several opportunities for market developments and/or can pose threats to the incumbent firm, and should therefore not be neglected in the strategy formation process. Nor should it be assumed that it does not have an influence on the creation of a blue ocean.
A company should not be constrained with what it has
This assumption argue that a company should look beyond its current assets and capabilities and try to create new and value-added factors to a product or service, and at the same time eliminate nonvalue-adding factors (Kim and Mauborgne, 2005). The four actions framework and grid provided in the book create a picture of what factors to reduce, eliminate, create or maintain. Factors that create little value or even reduced value should be eliminated and reduced, while new sources of value should be sought for (Kim and Mauborgne, 2005). activity-based cost management literature- minimize costs, without diminishing value for the customers. Resource-based view shows that new resource combinations can contribute to sustainable superior returns (Rugman and Verbeke, 2002). Penrose (1959) initiated the idea that firms should look at themselves as a collection of resources and firms