Which of the Following Is a Disadvantage of First Movers

question 66

Multiple Choice

Which of the following is a disadvantage of first movers?

• A) They cannot establish significant brand loyalty due to high costs.
• B) They cannot create switching costs for their customers, thus making it difficult to enter the market.
• C) They decrease sales volume compared to their rivals, and thus operate at a loss.
• D) They run the risk of building the wrong resources and capabilities.
• E) They do not have the power to exploit network effects and positive feedback loops.

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Definitions:

Cash Flow

The net amount of cash being transferred into and out of a business, a key indicator of financial health.

WACC

WACC, or Weighted Average Cost of Capital, represents a firm's blended cost of capital across all sources, including debt and equity, weighted by their respective proportions.

NPV

Net Present Value, a calculation used to determine the value of a project or investment by discounting its future cash flows to the present.

Cash Flow

The total amount of money being transferred into and out of a business, especially considered important for maintaining liquidity.