(4)

PotenGal compeGtors
(Exis1ng)
Compe1tors
Barriers to entry

Poten1al
CompeGtors compe1tors Factors that make it dicult The larger the barriers, the

and costly for a company to more dicult it is to enter
enter a parGcular industry the business. So, larger
barriers lead to few new
Suppliers An organizaGons
task environment
Buyerss
They are obstacles that entrants (potenGal
make it dicult for rms to compeGtors)
enter a parGcular type of
business.
SubsGtutes

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How to create barriers to entry?

What is economies of scale?
Economies
of scale Economies of scale is Entry barrier Companies
cost advantages for potenGal enjoy
Create That discourage associated with large compeGtor is
high
economies of
scale
barriers potenGal operaGons
Brand loyalty to entry compeGtors

E.g. buying raw material

in bulk purchases, Cost per unit
Can spread
costs
manufacturing products lower than
amongst
potenGal
Government in large quanGGes compeGtors
large
quan;;es
regulaGons
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