Industry Rivalry - Threat of new entrants

Sandra Reed
Mind Map by Sandra Reed, updated more than 1 year ago
Sandra Reed
Created by Sandra Reed almost 6 years ago
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Professional PHR SPHR Mind Map on Industry Rivalry - Threat of new entrants, created by Sandra Reed on 02/17/2015.

Resource summary

Industry Rivalry - Threat of new entrants
1 Threat of new entrants
1.1 Economies of scale: New competitors usually achieve at the beginning a lower sales volume than incumbents, and thus have a cost disadvantage if economies of scale play a role in the industry
1.2 Absolute cost advantages: learning curve based on proprietary products, proprietary cost-effective design, secure access to essential inputs (raw materials)
1.3 Product differentiation often increases customer loyalty, which is the reason why it is more difficult for new competitors to attract customers
1.4 Capital Requirements: A high need for investment, for example for research and development, production, infrastructure or for marketing. It only allows financially strong companies to enter the market. Moreover, the high investment requirements increases the risk for market entry, causing it to be less attractive
1.5 Switching costs for customers supplier changing reduces their willingness to change
1.6 Access to distribution channels: When key distribution channels bound or occupied, a new competitor has poor sales opportunities
1.7 Expected reactions of established competitors
1.8 State influence: State restrictions, requirements and regulations and subsidies can impede market entry or lead to disadvantages for new competitors
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