BUSINESS ADMINISTRATION
STRATEGIC MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The reaction of incumbent firms to rapid market growth.
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Strong brand preferences and a high degree of customer loyalty.
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High capital requirements and restrictive government policies.
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Strong “network effects” in customer demand.
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Detailed explanation-1: -The reaction of incumbent firms to rapid market development is generally not regarded as a barrier to entry, as an established firm’s response to market changes would not limit or prevent new firms from entering the market.
Detailed explanation-2: -Which of the following is NOT a barrier to entry that would allow the monopolist to keep potential competitors out of its market? The market price of the product is too high. If there are no barriers to entry into an industry, long-run economic profits must be zero.
Detailed explanation-3: -There are 4 main types of barriers to entry – legal (patents/licenses), technical (high start-up costs/monopoly/technical knowledge), strategic (predatory pricing/first mover), and brand loyalty.
Detailed explanation-4: -Common barriers to entry include special tax benefits to existing firms, patent protections, strong brand identity, customer loyalty, and high customer switching costs. Other barriers include the need for new companies to obtain licenses or regulatory clearance before operation.