More rivalry results from the slow industry growth

More rivalry results from the slow industry growth rate
of only 5% per year and the fairly high fixed costs of 35%.
Threat of Entry
Threat of entry is high even though the machine shop services industry is
unattractive. The industry is easy to enter because of low barriers to entry.
For example, there are no economies of scale as companies are small (less
than 20 employees) and capital requirements are modest (capital intensity is
13¢ per $1 labor). The falling price and wide availability of CNC machines
means differentiation is not a barrier and neither is proprietary technology.
MGMT 485W, Module 2 Exercises 14

MGMT 485W, Module 2 Exercises 15