Essay Paper on Strategies Employed by Market Followers

by Cindy Schenn

There are many reasons for companies to be the first to offer new products and services. But there are many cases when approach is not practical. Sometimes companies don’t have the resources to develop the new technology on their own. There also could be problems with the technical potential of the new technology.

So when the company decides to adopt the market follower approach, it must have a strategy that is carefully crafted and intelligently executed.

               The company can have several options:

      –    Immediately license the process, despite its unprofitable terms.

      –    Postpone a decision until the business and technical situation became clearer.

–          Initiate a program, singly or in concert with other companies, to develop a competing process.

–          The company can also use the strategy of imitation

The followers have important advantages. They have the ability to learn more about a technology before committing scarce resources. They can see market reaction to product design and features, avoiding spending investment for obsolete technology. A follower strategy has even better advantages when the firm delays investments in technologies that later may become obsolete.

             Conclusion

 The choice of the strategy would depend on the evaluation of how rapidly the new process would be adopted and how much of the total market would be at risk. It’s also important to know the rate at which progress would be made to improve the technical and economic parameters of the new process.

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