GK
BUSINESS MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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deals with competition in that it pertains to the level of ease for competitors to be able to enter a company’s market
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research and development, rate of technology changes
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determined by the ability and likelihood of customers finding another way to either make or provide the services or products a company offers
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should occur every so often to ensure avoidance of future problems associated with risks and risk management; involves testing current systems and methods to minimize the likelihood of other issues arising
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a company may also take the opposite approach and invest in new resources if they feel their current ones are not substantial enough to handle the risks
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Detailed explanation-1: -A high threat of new entrants makes an industry less attractive – there are low barriers to entry. Therefore, new competitors are able to easily enter into the industry, compete with existing firms, and take market share. There is a reduced profit potential as more competitors are in the industry.
Detailed explanation-2: -What is the threat of new entrants? The threat of new entrants is the risk a new competitor creates for current companies within an industry. This occurs when a new company begins selling a similar product or service as an existing company.
Detailed explanation-3: -What is Threat of Entry? To defend against the threat of new competitors, companies depend on barriers to entry within an industry such as customer loyalty, product differentiation, market share, and cost advantage. Questions to ask include: How easy is it for new companies to enter the market?
Detailed explanation-4: -Threat of New Entrants Analysis For example, if your industry has low brand loyalty and few government regulations, the threat of new entrants will likely be relatively low, and you may be able to carve out some market share. This environment would lead to more chances for business growth.
Detailed explanation-5: -Economies of scale act as a threat to the new entrants because whenever a new entrepreneur enters a market, he/she faces the challenge and risks related to the creation of huge scale capacity in the initial phase of his/her business, and this serves as a severe cost disadvantage for that entrepreneur in the market.