Which of the following is NOT an entry barrier to an industry?a.expected competitor retaliationb.economies of scalec.customer product loyaltyd.bargaining power of suppliers
Question
Which of the following is NOT an entry barrier to an industry?a.expected competitor retaliationb.economies of scalec.customer product loyaltyd.bargaining power of suppliers
Solution
The option that is NOT an entry barrier to an industry is d. bargaining power of suppliers.
Here's why:
a. Expected competitor retaliation: This is a barrier to entry because new entrants may fear that existing competitors will lower their prices or increase their production to maintain their market share, making it difficult for the new entrant to gain a foothold.
b. Economies of scale: This is a barrier to entry because industries with significant economies of scale may be difficult for new entrants to compete in unless they can achieve a similar scale. This is because the cost per unit decreases with the increase in production.
c. Customer product loyalty: This is a barrier to entry because if customers are loyal to existing products, it can be difficult for new entrants to convince them to switch to their product.
d. Bargaining power of suppliers: This is not typically considered a barrier to entry. While it can affect the competitive environment of an industry, it doesn't directly prevent new companies from entering the industry. It's more about the relationship between existing companies and their suppliers.
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