Competition

Question 1

What is competiton?

Answer 1

Competition is a rivalry amongst sellers.

Question 2

What is barriers to entry?

Answer 2

Factors that could prevent a firm from entering and competing in a market?

Question 3

What are the factors of barriers to entry?

Answer 3

1. Large start-up cost
2. Having the marketing budget to break customer loyalty
3. The inability to gain economies of scale
4. The possibility that exisiting businesses will start a price war
5. Legal restrictions such as patents

Question 4

What is barriers to exit?

Answer 4

Factors that could prevent a firm from leaving a market, even if it wanted to.

Question 5

What are the factors of barriers to exit?

Answer 5

1. The difficulty of selling off capital
2. Hugh redundancy costs
3. Contracts with suppliers
4. Lease with landlords