Illustrates the effects of stronger potential threat

Question

Illustrates the effects of stronger potential threat?

Answer 1

• Continuously growing market requirement and high potential benefit act as a magnet, motivating potential entrants to commit the resources required to hurdle entry barriers.
• The finest test of whether potential entry is a weak or strong competitive force in the marketplace is to inquire if the industry’s profit prospects and growth are strongly attractive to the potential entry candidates.
• The stronger the threat of entry, the more that current firms are driven to look for ways to make stronger their positions against newcomers, pursuing strategic moves to not only defend their market shares, but also create entry more difficult or costly.
• The danger of entry changes as the industry’s forecast grows dimmer or brighter and as entry barriers fall or rise.