Question

Provide an example of a competitive industry with low barriers to entry. Defend your example and explain why the barrier to entry in this industry is low.

Answer 1

Entrepreneurs are now a days considering Barriers to Entry as the most important matter while entering into market. When ever an entrepreneur is starting a new business, the entrepreneurs has to taken into account certain challenges like;

• Costs incurreed at the time of startup.
• Government red tape
• Problems faced at the time of hiring new employees
• Challenges from the side of competitors
• Consider compete with those who already has an existing sloid customer base.

Most often, Firms are favouring entry bariers only because to control their competition limit and inorder to claim market share at large. Also barriers to entry can be either Ancilliary of Primary, where as Primary barriers is something which represents as a barrier alone like huge startup costs. On the other hand, ancilliary barrier is not an alone barrier, instead it may combine with other barriers. Also it slower down the potential ability of firms to enter into the industry. Also we can say that it may serves as a reinforcement to other barriers.

Simply we can say that Low Barriers to Entry means there is only low(minimum) barriers that allows the entrepreneurs to enter in to the global market.

As an example we can say that following services provided by the industry would be considered to be lowest barriers to entry.

• Scientific Services
• Technical Services
• Professional Services
• Construction
• Retail Trade

Apart from above professional services, Scientific and Technological services are considered to be the industries having a low cost setup while entered into the market economy;

1. With approx 38% of businesses formed by entrepreneurs
2. OR Bought/Acquired for approx lower than $5000
3. Approx 8.7% requires $50000 or moreover..