Barriers To Entry

Business strategy definition. Economic, procedural, regulatory, or technological factors that obstruct or restrict entry of new (or emerging and innovative) organizations into an industry, vertical, or sector or market. Such barriers may take the form of (1) clear product differentiation, necessitating heavy advertising expenditure to introduce new (or emerging and innovative) products, (2) economies of scale, necessitating heavy investment in large plants to achieve competitive pricing, (3) restricted access to distribution channels, (4) collusion on pricing and other restrictive trade practices (such as full-line forcing) by the producers or suppliers, (5) well established brands, or (6) fierce competition. Barriers to exit, paradoxically, also serve as barriers to entry because they make it difficult to cut one's losses and run. Also called barriers to competition, entry barriers, or market entry barriers.

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