a. How does an industry characterized as highly differentiated (in other words,

Question

a. How does an industry characterized as highly differentiated (in other words, the opposite of highly commoditized) serve as a barrier to entry? Besides explaining what the barrier means, conceptually explain how a potential new entrant specifically is going to be at a disadvantage. b. How do you identify/measure this disadvantage for the potential new entrant - give me two viable financial measures. Offer rationale for each measure as to why it is a direct and meaningful way of measuring the disadvantage for the potential new entrant. c. For a potential new entrant (i.e., a client who hired you for consulting advice) who faces this barrier, what is one viable option for it to consider should it still want to enter the industry, be competitive, and not accept below-normal performance? Give this client a game plan.

Explanation / Answer

An industry can be characterized as highly differentiated based serve as barrier to entry based on many factors like in many industries if someone want to work then it require huge investment, in this as it is not easy for everyone to get huge money in start so very less people will come like open a multi-specialty hospital. In this very less players are available. Other factor is how strong are other players and how much customer trust them, in some case customer trust is so strong that people don’t want to change and then it will become tough for any company to enter in that market.

Major factors depend on: the reaction of existing competitors to new entrants; and the barriers to market entry that prevail in the industry

Based on the above explanation financial measures are :-

Before entering any business, it is important to understand market, available opponent and also all possible barrier. Then based on the that see how much preparation and money will be needed in advance before launching. This will help in entering with a Bang as in many industries mouth to mouth marketing is a very important factor for success and this Bang will help in becoming topic of town, rest depend on how good your service is or your product.

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