. 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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- Spring '11
- Dean
- Shopping mall, Barriers to entry, Types of restaurants, food court
-
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