Question

What entry barriers exist in (a) the coffee-bar business, (b) cable TV, (c) the taxi-cab industry, (d) the illegal drug trade?

Answer 1

***please rate ***

Ans) Barrier to entry is something that makes entry of new firms into the market difficult. It can be consumer loyalty of already established firms, high infrastructure cost, licence etc.

For coffee bar restaurant, acquiring food licensing is a major barrier to entry. And if coffee bar is of any global brand, like costa, Starbucks etc then getting franchise is a major barrier.

For cable tv business, loyalty of consumers of the already established firms provide cost advantage to them, which makes entry of new comers difficult. Because due to low consumer base, they won't be able to provide services at low cost like that of already established firms with large consumer base.

For taxi cab industry, input cost is very high. For eg- cost of cab, advertising, hiring talented professionals etc.

For illegal drug trade, threats from existing suppliers exist because it is highly profitable business. Further, threat from government also exists due to the illegal nature of business.