Question

For most companies, the web ______ the threat that new competitors will enter the market by ______ traditional barriers to entry. Select one:
a. Decreases, increasing
b. Increases, decreasing
c. Decreases, decreasing
d. Increases, increasing
e. Decreases, decreasing

Answer 1

Answer: b. Increases, decreasing

Explanation: For most companies, the web increases the threat that new competitors will enter the market by decreasing traditional barriers to entry. Traditional barriers to entry include

a. Economies of scale

b. Product differentiation

c. Capital requirements

d. Switching costs

e. Access to distribution channels

f. Cost disadvantages

g. Government policy

thus, by reducing some of these barriers to entry the Web increases the threat of new competition.