Question

QUESTION 1 What is the risk associated with being a first mover? O If customer loyalty is very high, critical relationships may be established and a barrier to entry into the market already established. O Competition is based on cost and it may be difficult to be profitable. O Costs of establishing the market are hard to recover. O These industries and nations have low customer loyalty.

Answer 1

Being a first mover means being the first one to launch product or service in the market. Naturally, the risk associated with being the first mover is that, you will need to put in additional effort to educate customers about your product/services, you will need to refine the channels of sales, etc. Such effort usually cost massive capital. This is also the phase where you build the market. And the risk is that if the product fails, then the cost becomes difficult (or impossible) to recover. Hence the correct answer is

“Costs of establishing the market are hard to recover”