Hi guys, welcome back to Global Business Environment course two. We're in module four, and this is part one of module four. In this module we're trying to understand, how companies should enter foreign markets. How they should organize and structure, their business to enter these markets. And we're also looking at when. And even where they might enter. One of the things we might talk about when we talk about company organization and modes of entry and market entry, especially in the global arena, is, we talk about something called FIRST MOVER ADVANTAGE and that is, very simply put, the advantage of being the first. In your industry or sector, of your competitors into that new market. So for example, if a new country, let's say India, opens itself up to the retail trade market and allows foreign chains, retail store chains to enter. For the first time does a company like target from the United States want to enter first and be the very first one to market before any other foreign competitors? Does car ford a, a French chain, retail chain want to be the first company. To enter the market before any of their foreign competitors have established themselves. And the argument that is that there are clear advantages to being the first to making the first move. And those advantages include brand recognition, establishing yourself in the market, learning about. The different institutional practices, the culture, the norms and values, the customers, and their preferences and so you have all of these advantages that allow you to build up a position far ahead of any other company. You might think, for example, of the tablet market. And the penetration that Apple has had with the iPad, being the first mover in, in current version of touchscreen tablets. Clearly, there were tablets before Apple, but with Apple's iPad, a certain form factor emerged. And competitors quickly followed, but Apple is widely seen as the first to market and it had, has had first mover advantages. It's also the case that being first has its disadvantages. We also talk about late movers. Or second movers having advantages. In fact this image right here shows the benefits of being a late mover. A late mover might come into the market several years or several months into a new foreign market after a competitor or other competitors. And being late to the market, they may have be able to learn from the mistakes of the first mover. The first mover may have spent a lot of time, money and other resources to work through customer preferences and things that don't work. Adaptations to the product that are necessary and the late mover can come in and save all those costs the time, the money and other resources and reap the benefits. The downside is this first mover may have already established themselves as a strong brand. And it may be impossible or very, very difficult to overcome the dominance of the first mover. When I think of first movers, I think of Coca Cola. It was has been a very important pioneer in globalization. One of its main competitors is Pepsi-Cola, and they also are a company with great tradition and history and they also have a strong global presence. But in some markets, for example Mexico, Coca-Cola has a very dominant position. And you might argue that that is due in part to the first mover advantage that Coke has simply being first to market, establishing relationships with suppliers and distributors et cetera. So there are clear advantages to being the first mover. Let me give you another example from Mexico. Let's look at the pizza industry and foreign entrance, into the pizza market in Mexico. We see from this website that Pizza Hut, global brand in the pizza industry, first entered the Mexican market in 1969. Now it doesn't say anything else on this site about their success there, but they clearly were one of the first movers into the Mexican market. They have a presence in Mexico today. They are known. And do have some level of success. But when we compare that success to one of its main competitors, Domino's Pizza, who entered in 1989, a full 20 years after Pizza Hut. Domino's has an overwhelmingly dominant position in Mexico in the pizza market. Now, Pizza Hut has caught up to some degree, but Domino's is the preferred favorite pizza chain of any type now, on a national level in Mexico and throughout Mexico, and so you might argue that. Domino's benefited from watching Pizza Hut and its example and learning from its mistakes and what the next consumer expects and wants on a pizza. Certain toppings that are popular certain deals and ways of selling for example in Mexico it's very common to have a two-for-one Tuesday offer for pizza. And so, maybe the case that Pizza Hut learned much of this. Domino's was able to mimic or copy it by being the second mover or late mover into the Mexican market. And so, it's not clear that it's obvious when you are standing there, trying to figure out. When and where should we go. That it's clear you should be first or last or second, in the middle. It depends on a lot of factors and beforehand no one can tell you for sure that it's the right decision to make. This exists not only in foreign markets, but as I mentioned earlier, for any company as I described with the iPad. Speaking of that, Apple was one of the first companies to develop a handheld personal digital assistant, if you recall, in the 1990s. Apple launched a device that I'll pull up here called the Newton. As you might recall, they were very early to market with this handheld public personal digital assistant. That had a stylus and was a touch screen enabled device. Even was had connect. Had connectivity to networks but it was not a successful product. If you recall the Palm Pilot. Was actually the big victor in the 1990s in this market. And so Apple failed in this instance to, at being the first mover. There was no way to predict in this particular market entry that it, this was the right time to launch this product. And in the same way, there was no way to know that being the first to market or the second or the last. The pizza market in Mexico was the right approach. So, I wouldn't believe necessarily expensive consultants or others who can guarantee they know for sure the right way to do it, or the right time to do it, there's just no way to predict the future. All you can do is use your best judgement. Make your do your research, and make your best decision based on that information that you've collected that time. And so timing of entry is a very important part of the decision for companies when they consider how, when, and where to enter into foreign markets. And so this is part one of module four. We'll see you back next time in part two.
