Assume Tesla is a first mover in the fully electric car segment of the auto industry. Requirements: a. State one advantage source (from the list below) and describe how Tesla is gaining that advantage. b. State one disadvantage source (from the list below

Question:

Assume Tesla is a first mover in the fully electric car segment of the auto industry. Requirements: a. State one advantage source (from the list below) and describe how Tesla is gaining that advantage. b. State one disadvantage source (from the list below) and describe how Tesla has experienced it. ADVANTAGE SOURCES: 1) The first mover has an opportunity to exploit network effects and positive feedback loops, locking consumers into its technology. 2) The first mover may be able to establish significant brand loyalty, which is expensive for later entrants to break down. 3) The first mover may increase sales volume ahead of rivals and thus reap cost advantages associated with the realization of scale economies and learning effects. 4) The first mover may be able to create switching costs making it difficult for other companies to enter the market. 5) The first mover may be able to accumulate valuable knowledge related to consumer needs, channels, product technology, process technology, etc. DISADVANTAGE SOURCES: 1) First mover must bear significant pioneering costs that later entrants do not. This is expensive. 2) First movers are more prone to make mistakes due to uncertainties in the market. Later entrants learn from such mistakes. 3) First movers may invest in obsolete technology.