What would be some examples of Threat of New Entry (Porter's Five Forces Analysis) Threat of New Entry
with the financial services firm Charles Schwab?
When entry barriers into an industry are high, new businesses can hardly enter the market due to high costs and intense competition. Like the automobile or the health insurance, highly concentrated industries can claim a competitive advantage because their products are not homogeneous, and they can sustain a favorable position. On the other hand, when the entry barriers into an industry are low, new businesses can take advantage of the economies of scale or critical technologies. Possible barriers to entry could include:
· Economies of scale. High initial investment costs or fixed costs
· The cost advantage of existing players.
· Brand loyalty.
· Intellectual property like licenses, etc.
· Shortage of essential resources.
· Existing players control access to raw materials.
· Existing players control distribution means.
· Existing players have secure customer relations. They have elevated switching costs for customers.
· Legislation and government acts.
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