Question

Which of the following conditions generally raise the barriers to entering an industry?

a) Low levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industry

b) Rapid market growth, low buyer switching costs, and weak brand preferences and customer loyalty

c) Product offerings that are pretty much standardized from rival to rival

d) High capital requirements, difficulties in building a network of distributors-retailers and securing adequate space on retailers' shelves, and the likelihood that industry incumbents will strongly contest the efforts of new entrants to gain a market foothold

Answer 1

High barriers to entry in industries are caused by high capital needs, strong brand loyalty, aggressive pricing strategies by existing competitors, and the necessity for substantial advertising budgets to compete.

Step-by-step explanation:

Conditions that generally raise the barriers to entering an industry include high capital requirements, difficulties in establishing a distribution network, intense competition from incumbents, and strong brand loyalty among consumers. Factors such as well-respected brands that took years to build, a reputation for aggressive price cutting in response to new entrants, and large advertising budgets required to compete with established firms all contribute to higher barriers to entry. These factors can dissuade new competitors from entering the market due to increased costs and risks.