(b) Barriers to entry are factors in an industry, which discourage new entrants. It is in the interests of existing competitors to deter new entrants, for example:
(i) Economies of scale
(ii) Brand (or product) differentiation, advertising
(iii) Capital requirements (amount, availability and cost)
(iv) Switching costs
(v) Access to distribution channels
(vi) Cost disadvantages independent of scale
(vii) Government regulation (including legal barriers)
(viii) Patents and trade secrets
Barriers in the carpet-retailing sector are likely to be:
(i) The number of established carpet retailers in an already mature market.
(ii) The variety of 'own brands' available in dominant department stores.
(iii) The cost, availability and maintenance of suitable retail sites.
(iv) Suitable suppliers and reasonable terms.
(v) The retailing skills, which will need to be developed.
(vi) Excessive marketing costs and marketing skills, which will need to be developed.
(vii) The ability to offer a broad product line in line with the local/geographical preferences and the market intelligence to match.
(viii) The impact of product line breadth on cost.
(ix) The level and nature of the service offered.
(x) Brand loyalty. |
