Question

Using a Smartphone as the Target Industry   

For Part I of the exercise, you can analyze the smartphone segment from 2007 on, using Apple (iPhone) as the first mover, Samsung (LG, etc.) as the second mover(s), Huawei, Lenovo, Xiaomi (and other emerging market producers) as the late movers. Or you can go back further into the history, and use Blackberry (developed by RIM) as the first mover. One paragraph of a brief summary of the industry is enough for this part. You can use References #6 "IDC's report on smartphone market share" in the supplementary material (posted under this assignment) for industrial profile and major competitors.

For Part II of the exercise, only two questions are required:

Q1. Describe the competitive speed in this industry, e.g. is this a fast, standard, or slow-cycle market at the time the first mover initiated its product? (e.g. since Apple launched iPhone in 2007.)

Q3. Identify a first mover, second mover, or late mover, and evaluate whether it has been successful (in terms of market share, profit, growth potential, etc.), and explain why, using the concepts from the textbook as in References #2 (Hitt Page 146-148) , and/or supplementary concepts (optional) as in References #4&5.

One or two paragraphs for each question is enough. Feel free to add answers to other questions.

You will need to read the supplementary material to prepare the answer (#1-3 are required, the rest optional; most of the optional material are summarized on Slide#27-31 in LectureNote#8Chapter5; all material are posted in BB if not in the textbook 10^th and 11^th edt.).

Answer 1

For Part I of the exercise, you can analyze the smartphone segment from 2007 on, using Apple (iPhone) as the first mover, Samsung (LG, etc.) as the second mover(s), Huawei, Lenovo, Xiaomi (and other emerging market producers) as the late movers. Or you can go back further into the history, and use Blackberry (developed by RIM) as the first mover. One paragraph of a brief summary of the industry is enough for this part. You can use References #6 "IDC's report on smartphone market share" in the supplementary material (posted under this assignment) for industrial profile and major competitors.

While Blackberry was the original concept for a smartphone, Apple was able to stand out as the industry’s first mover by its advanced innovation and technological capabilities, thus, solidifying Apple’s competitive advantage and making it a worldwide competitor even to this day. Previous phones before Apple’s I-Phone relied on keyboards and keypads with limited internet capabilities, while the I-Phone traded keyboards for touch-screens and was able to navigate the World Wide Web as easily as a laptop computer could. Industry competitors like Samsung could not offer a substitute until it released its Galaxy S model in June 2010, three years after Apple. Today, worldwide use of a smartphone is expected to exceed 5 billion total users. Apple’s market capital share, according to the NASDAQ, is listed as 808,710,727, which far exceeds its American competition. However, as additional companies such as Huawei and LG Electronics alongside Samsung continue to catch up and exceed Apple’s innovative competitive advantage, Apple may have to introduce another element within the smartphone industry to maintain their first mover position.

1. Describe the competitive speed in this industry, e.g. is this a fast, standard, or slow-cycle market at the time the first mover initiated its product? (e.g. since Apple launched iPhone in 2007.)

The smartphone industry was, when it was first introduced, a slow-cycle market. Apple’s new I-Phone was amazingly innovative from the industry’s Blackberry predecessor, and it was costly to imitate or offer substitutes for it for several years. However, as companies such as Samsung and Huaweihave been able to catch up, if not exceed, Apple in terms of features and technological advances, the smartphone industry has begun to become a faster-paced cycle market. This has made Apple’s competitive advantage of innovativeness harder to preserve, causing them to instead focus on differentiation through application options and convenience capabilities.

3. Identify a first mover, second mover, or late mover, and evaluate whether it has been successful (in terms of market share, profit, growth potential, etc.), and explain why, using the concepts from the textbook as in References #2 (Hitt Page 146-148) , and/or supplementary concepts (optional) as in References #4&5.

An example of a first-mover firm would be McDonald’s, which is currently being hailed as the first mover in the fast-food industry for mobile food orders and mobile payments. McDonald’s has often been a first mover in many elements of the industry—such as being the first restaurant to focus in on time efficiency and drive-through set-ups. Considering the fast-food industry is a fast-cycle market, McDonald’s is able to capitalize many times more than the industry’s second movers, such as Wendy’s or Burger King. Despite its recent below-average returns, their innovation and aggressive actions to preserve their competitive advantage over their rivals has allowed the golden-arches to bounce back consistently even after experiencing profit loss beforehand. McDonald’s has been historically more capable of innovation and the risk-taking often associated with being a first mover compared to its rivals, which has allowed it to stay ahead in the fast-food game.

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