3 Matching Annotations
- Jul 2021
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nts2.ximb.ac.in nts2.ximb.ac.in
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It is the threat of entry, not whether entry actually occurs, that holds down profi tability.
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The threat of entry in an industry depends on the height of entry barriers that are present and on the reaction en-trants can expect from incumbents. If entry barriers are low and newcomers expect little retaliation from the entrenched competitors, the threat of entry is high and industry profi t-ability is moderated.
The threat of entry depends on the barriers (i.e. moat) that are present and the reaction entrants can expect from incumbents. If both are low, the threat of new entrants is high.
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Particularly when new entrants are diversifying from other markets, they can leverage exist-ing capabilities and cash fl ows to shake up competition, as Pepsi did when it entered the bottled water industry, Micro-soft did when it began to offer internet browsers, and Apple did when it entered the music distribution business.
When new entrants enter a market, they can often leverage existing cash flows and capabilities e.g. Apple when it entered the music distribution business.
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