Question

An obvious and controversial extension of new trade theory is the implication that governments should consider strategic trade policies. Strategic trade policies would suggest that governments should nurture and protect firms and industries where first mover advantages and economies of scale are likely to be important, as doing so can increase the chance that a firm will build economies of scale and eventually end up a winner in the global competitive race. should the governments protect the firms with first movers advantage or not ? I need one page long answer please

Answer 1

YES, the government should protect the firm with the first-movers advantage

FIRST-MOVER

• It is a service or product that gains a competitive advantage by being the first to a market with a product or service. Being first is able for the company to establish strong brand recognition and customer loyalty before competitors enter the arena.
• It gives additional time to perfect its products or services and setting the market price for new items.
• First movers are always followed by the competitors that attempt to capitalize on the first-mover success and gain market share.
• The first movers in the industry are also established sufficient market share and enough customer base that maintain the majority of the market.

ADVANTAGES

1. Brand name recognition- It endangered loyalty among the existing customers and also draw the new customers to a company,s products even after other companies entered the market. It also positioned companies to diversify offerings and services.
2. Economies of scale- This advantage is regarding manufacturing or technology-based products. First movers established a most cost-efficient means of producing and delivering a product before it competes with other businesses.
3. Switching costs- It lets to maintain a strong business foundation. Once a customer purchased a first-mover product, switching to rival products may be cost-prohibitive.

EXAMPLES

1. Amazon- Created the first online book store.
2. e-Bay- Built the first online auction website in 1995.
3. Colossus coca-cola - Soft drink producer among beverages.
4. STP- Auto additive giant.
5. Kellogg- Boxed cereal titled.

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