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:

Indirect Labor

Labor costs associated with workers who are not directly involved in producing goods but support the production process.

Fixed Overhead Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance.

Performance Report

A performance report is a document that compares actual results to planned or expected results, analyzing variances to understand performance and guide future decision-making.

Budgeted Amounts

planned financial values or targets for revenues, expenses, assets, liabilities, and equity accounts.