BARRIERS
OF ENTRY
The cost that must be incurred by the new entrant into
a market that incumbents do not have or have not had to incur. As barriers to
entry protects incumbent firms and restrict the competition in the market. Barriers
to entry often cause or aid the existence of the monopoly or given companies
market power.
· Aggressive
tactics are the big barriers for entry in market.
· Some
of the other sectors like telecom industry, insurance companies, banking
sectors are having barriers to entry by the government.
· Licence
fee, spectrum fee, subscription fee, etc we have to incur all these expenses to
get on firm the barriers and enter into the market.
Example
for barriers of entry
Brand
loyalty-
It corresponds to the preference of customers for a
particular product from an established firm. As a example of barriers of entry,
brand loyalty can discourage potential entrants as it compels them to spend
heavily on promotional and marketing efforts.
Distribution
arrangements-
Agreements between a manufacturers and retailers can
make it difficult for a potential competitor to enter into a market. Examples of
these are exclusive agreements between a clothing company and a large chain of
departmental stores.
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