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Threat of new entrants

Threat of new entrants - Threat of new entrants Given the...

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. Threat of new entrants Given the nature of the bakery industry, threat of new entrants is high as there are relatively low barriers to entry. Firstly, initial capital outlay is relative low as compared to other industries as equipment cost is low and there is little research and development cost incurred prior to starting the business. Secondly, product differentiation is present though it is hardly a deterrent factor as many businesses sell the same products or imitate quickly. Lastly, the ability to access effective distribution channels presents a greater threat to new entrants. Strategic locations with high human traffic often translate to higher lease payments. As such, not all bakeries are able to situate themselves in prime locations to capitalize on high traffic areas. With regards to the food atria and restaurant businesses, there is a lower threat of new entrants as the capital outlay is significantly higher. To tap on economies of scale and build its brand name, these eateries trend to open more than one outlet. Also relevant expertise in running a restaurant is required. Most of the abovementioned food atria and restaurants own a relatively large number
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