... Hunger, 7th Ed, pg 61). New entrants to an industry can raise the level of intensity of the competitiveness among firms, thereby reducing its attractiveness. The threat of new entrants largely depends on the barriers to entry - obstructions that make it difficult for a company to enter an industry (Wheelen and Hunger, 7th Ed, pg 62). High entry barriers exist in some industries (e.g. shipbuilding) whereas other industries are very easy to enter (e.g. estate agency, restaurants). Key barriers to entry include the need to gain economies of scale quickly, the need to gain technology, large capital and investment requirements, high customer switching costs, lack of access to industry distribution channels, the likelihood of retaliation from existing industry players, and potential saturation of the market. Despite all the numerous barriers to entry, new firms sometimes enter industries with higher quality products, lower prices and substantial marketing resources. It is the ...

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