Location it will be difficult for the company to

Info icon This preview shows pages 2–5. Sign up to view the full content.

View Full Document Right Arrow Icon
location, it will be difficult for the company to duplicate this method without using extensive research, which will cost a lot of money. 6.Will a newcomer have to “steal” market share from existing players in order to enter this industry or is the industry growing so fast that no one will suffer from a new entrant? Yes, because currently, the market share, despite having 10 major firms, is distributed greatly amongst three of them: Macy’s, JCPenney’s, and ____. 7.Does any new entrant have to obtain licenses or any other form of regulatory approval in order to enter this industry? Explain 8.What action are you likely to take if a new entrant comes in and competes with you in your market? Will you reduce price? Will you innovate? Depending on what this new entrant does, Macy's could imitate the specific area in which the new company is excelling. If the company decides to do something new, Macy's should innovate. A company's competitive advantage is what compels people to come to its store, which is why Macy's should create a new feature or come up with a new strategy in order to retain customers. One trend that started over a decade ago has been a decreasing number of independent retailers. Walk through any mall and you'll notice that a majority of them are chain stores. While the barriers to start up a store are not impossible to overcome, the ability to establish favorable supply contracts, leases and be competitive is becoming virtually impossible. Their vertical structure and centralized buying gives chain stores a competitive advantage over independent retailers. Suppliers set the price of their own products Economies of scale are indeed an effective entry barrier. Larger companies have lower costs than smaller. Since an entrant to this industry would start out small, - economies of scale - proprietary product differences - brand identity
Image of page 2

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
- switching costs - capital requirements - access to distribution - absolute cost advantage - proprietary learning curve - access to necessary inputs - proprietary low-cost product design - government policy - expected retaliation - By appealing to greater demographics and particularly targeting a slightly more affluent group, the companies with a larger share possess more cash than its smaller competitors . Because this is the case, I believe that a newcomer would have to steal market share from existing players, since it is already greatly distributed among three major companies: Macy’s, JCPenney, and Dillards. To gain market share, a new entrant would be able to manage some control.
Image of page 3
Janine Nipal Business Policy Professor Sen October 26, 2011 Barriers to Entry There are five forces that an industry must acknowledge in order to establish a business strategy. Barriers to entry, which are obstacles of the emerging firm that cause difficulty in entering a specific market, are always a critical aspect to take into consideration when deciding whether or not a company should enter an industry. Non-discount department stores, in which Macy’s is categorized, have many obstacles to overcome. The challenges that a new firm or prospective competitor would encounter are relatively high.
Image of page 4

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern