![]() ![]() Diversification: Product diversification from existing firms into other categories. ![]() This firm may bring new and innovative expertise to the industry, thus changing the competitive dynamics for everyone. Take-over: A company from outside the industry may take-over an existing firm, thereby avoiding any of the traditional barriers to entry within the firm.How a new firm enters a market can happen in a number of ways: Sales and market shares will be redistributed and there may be an effect on price and product quality. This is because more competitors will fight for the same amount of business. If there is a higher threat of new entrants, this means that there are low barriers to entry and there is high possibility that the industry profit potential will decrease as a whole. According to his model, this threat changes the competitive environment and directly impacts the profitability of an existing firm. Porter’s definition helped people see this threat as substantial and influential. Porter believed that the possibility of new entrants had a significant part to play in developing and changing the competitive dynamics of any industry. In this article, we will look at an 1) introduction to the threat of new entrants, 2) determining the nature of the threat, 3) responding to new entrants – strategic entry deterrence, and 4) an example of and the threat of new entrants. © Entrepreneurial Insights based on the concept of Porter’s 5 Forces ![]()
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