Barrier to Entry

There are a number of ways that firms in an industry can keep the number of new entrants low. These techniques are referred to as barriers to entry. A barrier to entry is a condition that creates a disincentive way for a new firm to enter an industry. The six major sources or barriers to entry:

  • Economies of scale,
  • Product differentiation,
  • Capital requirements,
  • Cost advantages independent of size,
  • Access to distribution channels, and
  • Government and legal barriers.
Share it:  Cite

More from this Section

  • Service marks
    Service marks are similar to ordinary trademarks, but they are used to identify the services ...
  • Product line extension strategy
    A product line extension strategy refers to a strategy that involves making additional ...
  • Product attribute map
    A product attribute map refers to a map which illustrates a firm’s position in its industry ...
  • Pro forma balance sheet
    The pro forma balance sheet provides a firm a sense of how its activities will affect ...
  • Core Competency
    Core competency is a resource or capability that serves as a source of a firm’s competitive ...