Question

Potential competitors may enter an industry and begin to take market share from existing companies. What would be one of the largest challenges a new entrant would need to overcome to be successful when entering the industry?

Answer 1

Production costs are high and require high volumes to achieve profitability.

Explanation:

One of the largest challenges that will be faced by the potential competitors when they try to enter an industry will be that they will face that cost of production will be higher and they would require higher volumes for achieving profits. When a company is new to an industry there will be competitors who are already established well on that particular industry.

The challenges and the opportunity that are in existence will be well known to the existing competitors. They already have buyers and suppliers chain. Hence, the new entrant will have higher production cost and also they require higher volumes to achieve profits.