Difference between revisions of "Entry barriers"

Revision as of 19:18, 27 August 2020

Entry barriers

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-Entry barriers determine the thread of new competitors entering the market of a specific industry. New entrants, bringing additional capacity and the desire to gain market share have two negative effects on the attractiveness of an industry:
+Entry barriers
-# New entrants take away market share
-# New entrants bid down prices
-Overall effect is that profitability will reduce. Entry barriers help protect against new entrants. Examples of important entry barriers are:
-# High fixed costs
-## Customer acquisition costs such as the need for personal contact in sales
-# Brand loyalty
-## Brand recognition will lead to lower entry barriers in online sales
-# Steep learning curve
-# High [[Switching costs|Switching costs]]
-## Helps the incumbent to keep its customers
-# Strong IP protection
-## Essential for any form with high development costs but low reproduction costs.
-## Required for any digital good (music, film, software)
 [[Category:mbi]]