The telecom industry in the country of Andalus is an industry characterized by the presence of strong network effects, high brand loyalty, high economies of scale, and proprietary technology among incumbent firms.Thus, in the telecom industry, the:
A) threat of substitutes is most likely high.
B) threat of new entrants is most likely low.
C) bargaining power of buyers is most likely low.
D) entry barriers are most likely non-existent.

Question

Quizplus · Accepted Answer

In this scenario, the threat of new entrants is most likely low. The threat of potential entry is reduced when network effects are present. The threat of entry describes the risk that potential competitors will enter the industry. Entry barriers, which are advantageous for incumbent firms, are obstacles that determine how easily a firm can enter an industry.

The Telecom Industry in the Country of Andalus Is an Industry