Question

A firm that is first to the market with a new product frequently discovers that there are design flaws or problems with the product that were not anticipated. For​ example, the ballpoint pens made by the Reynolds International Pen Company often leaked. What effect do these problems have on the innovating​ firm, and how do these unexpected problems open up possibilities for other firms to enter the​ market?

Answer 1

Answer: The sales and image of the innovating firm might decline in the market.

Explanation: As only the innovating firm will have the option to sell the product in the market, customers will judge the whole firm on the basis of that product, the overall research done by the innovating firm will result in loss of money and time. On the other hand other firms can use the research done by the innovating firm and can analyze the problem that sustains in the model and just by correcting the flaws detected they will be able to capture a substantial amount of market share in a very small span of time.