The essay replies to the following questions from the assignment brief:
Question A:
1. Was there a first mover advantage in the electric automobile industry? Why or why not?
2i) With reference to the Industry Life cycle model, analyse the evolution of the electric automobile industry.
2ii)...
Strategic management
perspectives in the context of
automobile industry
,Introduction
Electric car industry is a market which is developing at an extremely fast pace and affected by a wide
variety of different factors of influence. In the light of its development during the last two decades, it
can be suggested that it is driven by strategic management thinking, innovation and technological
development, which are all used as sources of differentiation on the market. The current paper aims
to explore some strategic management perspectives of the industry, such as first mover advantage,
evolution, sources of competitiveness, glocalisation and different strategic choices through referring
to both theory and practice.
Electric automobile industry and first mover advantage
Competitive advantage is defined as the feature which makes a company better than its rivals on a
certain market (Grant and Jordan, 2015). It can be expressed in terms of improved capacity and
capability of a business to earn profit, its innovation, product offering, customer loyalty or unique
selling point. Sources of competitive advantage vary across businesses, industries and markets and
are emphasised differently by various companies. It can be driven by external (e.g. changes in
customer demand or preferences) or internal (e.g. innovation strategy focus) factors, as shown on
the figure below.
Figure 1: Drivers of competitive advantage
Source: Grant and Jordan (2015)
First-mover advantage has risen in 1988 as a concept as a form of competitive advantage which is
assumed to be obtained by the first company on the market or within a certain product category
(IRIS Advisors, 2020). The main idea behind the first-mover advantage is that the first company
entering a market or offering a certain new product would benefit more from control of resources,
attracting customers and building a loyal customer base (IRIS Advisors, 2020). There is a difference
between first mover, innovator (the first company developing an idea or patent), product pioneer
(the first company to have a working model), fast follower (early entrants but not first) and first
prover (a company which completely fulfils the needs and expectations of a pragmatic target buyer
in a meaningful target segment) (IRIS Advisors, 2020).
, When the electric automobiles industry is considered (including both fully electric and hybrid
vehicles), several points can be made. The industry is technology-based and driven by many different
factors, including innovation, differentiation and the ability of companies to address fast evolving
needs and expectations of consumers. It is a wide-spread assumption that Tesla was the first mover
in the industry with the introduction of its electric Model 3 in 2009 with which it is claimed to have
obtained a first mover advantage. However, this is not entirely correct. As stated by Bohnsack et al.
(2020) and presented on the figure below, electric and hybrid vehicles were not new for the market
in 2009. Actually, it has risen as an option in the 1900s and revived again in the 1980s-1990s, as well
as 2003 as a response to increasing concerns regarding emissions of vehicles and their impact on the
environment. Yet, the significantly increased electric and hybrid vehicles activity was evident in 2006
(Bohnsack et al., 2020).
Figure 2: Development of the market 2003-2015
Source: Bohnsack et al. (2020)
It can certainly be argued that Tesla gained a substantial advantage in electric vehicles (EV) segments
but it has been based on differentiation and uniqueness of the product rather than first mover on
the market. Actually, as also evident in the figure above, the company which has first mover
characteristics is Toyota with the introduction of its first hybrid car Prius back in 1997 (Bohnsack et
al., 2020). As also stated by a report focused on global electric and hybrid vehicles, the industry is
significantly shaped by companies’ abilities to adjust to evolving customer needs, develop
differentiation strategies and provide a distinctive offering (IEA, 2020). Based on this, it can be
claimed that first-mover advantage would be rather applicable in other types of industries. When
electric and hybrid vehicles are discussed, other features are claimed to affect market positions at a
higher extent.
Evolution of electric automobile industry – life cycle
model
A brief overview of the evolution of electric automobile industry is presented in the figure above. It
is obvious that the industry is driven by technological innovation, evolving customer needs and
increasing environmental concerns. The electric/hybrid vehicles industry can be classified as an
extension of the generic automobile market which also contributes to the complexity of assessing its
industry life cycle.
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