Barriers to Entry in Business Essay

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Barriers to Entry in Business

A barrier to entry is a factor, which dependant on the magnitude of its effect upon a start-up business makes it difficult or impossible to enter a marketplace. These factors could be things such as high start up costs, economies of scale or monopolisation. For example, high start up costs is a barrier to entry as it prevents anyone with low capital from entering that market.

2) Barrier to exit should be considered just as much when entering a market because if the company is anchored down to an unsuccessful marketplace, it will sink day by day, and if a barrier to exit is preventing them from leaving they couldn't cut their losses and escape while they can.
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I think that the product has been more successful branded by Dyson than if it was sold by a big manufacturer. It is seen as a trendy product to own, and may not have had this image if it was made part of a humdrum range of 'white plastic' type products, even if the technology is right. This would mean that Dyson actually overcame a barrier to entry by being independent. They retained control of their product so they could use a successful marketing strategy that may have been overlooked by larger firms - after all their rival products to day still are not as funky as a Dyson. The high financial cost of entering this marketplace (around £600,000) is another barrier to entry, and exit. In order to get into the marketplace, Dyson must find someone who is willing to lend him the money. Once he has done this he must make enough money to be able to repay his creditors, resulting in a barrier to exit. Other firms had strong brand images but Dyson did a good job of overcoming this, as I explained earlier. They made a product that was instantly recognisable, technologically good and bold enough to stand out above the competition, who are still to this day catching up.

4) The food retail industry in the UK is a difficult one to enter. There are many barriers to entry and exit. These include economies of scale, resulting in
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