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Question 3
Which of the following is a potential barrier to entry?
A Government grants
B Low regulation
C High know-how
D Low competitionc) High know-how.
Established businesses will have the benefit of experience under their belt which helps them be more efficient and keep the cost of overheads down, which ultimately helps keep the cost to the customer of the product/service down as well. If a new entrant lacks experience in the field, then its costs will be higher and reflected in the selling price, so it may find it difficult to get a foothold in the market due to being unable to match the selling prices of established businesses and make a profit. This could be enough to put a prospective new entrant off.
The other three: Government Grants, low regulation and low competition in a market make it more attractive to enter as these are in the favour of new entrants.
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