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ACCA Applied Knowledge · Business and Technology · Technological factors

Marlow Co is considering adopting a new technology before its competitors do. The technology is unproven, but could give a lasting advantage if it succeeds. Which statement best describes the main risk of this first-mover strategy?

The main risk is that competitors can watch Marlow, learn from its mistakes and copy successful features at lower cost, while Marlow bears the development and market education costs and the risk of immature technology. First-mover advantage is never guaranteed, and training is still needed.

  1. ACompetitors will be able to learn from Marlow's mistakes while Marlow bears the cost of development and market educationCorrect
  2. BMarlow will automatically gain all of the market share regardless of how the technology performs
  3. CMarlow will not need to invest in staff training because early adopters are exempt

Explanation

First movers bear the costs of development, testing and educating the market, and risk adopting immature technology, while followers can imitate and improve at lower cost. Advantage is not guaranteed, and training is still required.

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