In an industry, the threat of entry is high when
A) capital requirements are low.
B) expected returns are low.
C) technological know-how is industry specific.
D) switching costs are high.

Question

Quizplus · Accepted Answer

The threat of entry is high when capital requirements are low in comparison to the expected returns. If an industry is attractive enough, efficient capital markets are likely to provide the necessary funding to enter an industry. Capital, unlike proprietary technology and industry-specific know-how, is a resource that can be relatively easily acquired in the face of attractive returns.

In an Industry, the Threat of Entry Is High When