PORTER’S FIVE FORCES - THREAT OF NEW ENTRANTS Flashcards
1
Q
What is a threat of new entrants
A
The ability of new businesses to begin competing in a market.
2
Q
What are the barriers to entry
A
Start up costs
Economies of scale
Legislation
Brand loyalty
Specialist knowledge
3
Q
What is an impact on functional/ strategic decisions:
A
Marketing - creation of USP / strong brand image / price inelastic product
Finance - Allocation of budgets to marketing and R&D
Operations - Automate production, cut costs and gain economies of scale and specialist knowledge
People - investment in training and building skills
4
Q
Profits in terms of barrier to entry
A
Low barriers to entry = lower profits
High barriers to entry = higher profits
