Thursday, January 14, 2010

Threat of new Entrants

Threat of new entrants: This is self explanatory, this refers that there some business it has high threat to enter. The main threat to enter in to a business is that some business requires high initial capital. It can be done by many small companies. This kind of business has its own advantage. No one can enter into this business as easily as other business. One more threat is that it may require high skilled labour or high use of technology, only developed countries can able to those kind of infrastructure to the companies.
There may some restriction in government policy, it require looking at so many formalities to complete start up a business. Some business requires more number of distributor in order to distribute their products this also prevents some one to start a business. Let me give one example for this so that you can easily understand.
There are only two flight manufacturer in this world. This is because there is high threat to enter in to this business. The fore most things are that it requires huge capital that one can not be able to spend initially. Then it requires high skilled labour and technology. This business has its own advantage is that the competition of this industry is less compare to other businesses.

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