Capricorn Creative Inc., a U.S.-based advertising firm, was the first

QUESTION

Capricorn Creative Inc., a U.S.-based advertising firm, was the first in the advertising industry to identify the growth potential of Brazil and to make huge investments in its economy.

As a result, the firm was able to build brand loyalty and gain experience in that country’s business practices. In the language of business strategy, Capricorn Creative has typically benefited from:
A. a first-mover advantage.

B. forward integration.

C. unrelated differentiation.

D. lateral diversification.

E. technology transfer.

ANSWER

A
By identifying and investing early in a potential future economic star, international firms may build brand loyalty and gain experience in that country’s business practices. In the language of business strategy, early entrants into potential future economic stars may be able to reap substantial first-mover advantages, while late entrants may fall victim to late-mover disadvantages.