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However, some studies suggested that there can also be considerable first mover disadvantages and early market entry does not automatically endow pioneers with higher profitability. The timing of market entry is clearly as important as the firm’ s ability to fully exploit the early market entry. Studies show that first mover advantages in foreign markets depend on several internal and external factors, including the strategic importance of an investment, the close linkage of an investment to core business activities, the rate of technological change in the industry, and the policies of the host country government. First mover advantages are benefits related to the ability of pioneering businesses to obtain profits as the consequence of early market entry. There are five generic first mover advantages: cost advantages; pre-emption of geographic space; technological advantages; differentiation advantages; and political advantages.
STEPS NEEDED TO MAINTAIN MARKET SHARE
The, world’ s population has grown hugely and most people now live in cities. Hundreds of millions have moved out of extreme poverty and similar numbers have joined the global middle class, adopting in the process more resource-intensive diets and lifestyles. There are significant opportunities for business as a result of these changes but climate change, resource constraints, water scarcity and many other factors also remind us that we are approaching- if we have not already exceeded- the planet’ s ability to satisfy our appetite for growth. That is why the central challenge of our age- decoupling human progress from resource use and environmental decline- will also be one of the biggest sources of future success for business. The corporate world was involved in creating these challenges and needs to know how to deal with them, not least because we now live in a hyperconnected and more transparent world where corporate behavior is increasingly held to account in the court of public opinion.
Over the last 20 years, the amount of money flowing across borders grew at more than three times the rate of global GDP. International trade and foreign investment more than tripled; trade natural resources grew six-fold; and internationally-traded financial assets such as bank loans, bonds, and portfolio equity soared by a factor of 12 to 1. These figures translated into stronger economic growth across the world and enormous opportunities for business through the development of new markets and access to labor. Businesses benefited from exceptionally low interest rates, which allowed them to borrow cheaply and drove a major increase in trade, mergers and acquisitions. Cheap commodities and cheap labor led to a surge in economic growth in the industrialized world without the inflation that usually accompanies such growth.
At the same time, the emerging markets providing these resources also grew much more quickly, taking millions of people out of poverty and creating new markets for companies in both the developed world and emerging markets. Living standards rose rapidly, but they did so unequally and to the detriment of the environment in many areas.