THREATS OF NEW
ENTRANTS
MARKETING
MANAGEMENT
ANEEZA ARSHAD
THREATS OF NEW ENTRANTS
As part of Porter’s Five Forces, the threat of new entrants refers to how threatening a new competitor
might be to companies that already have a place in their respective industries. That includes how easy
it is for new companies to enter the industry in the first place. If the threat is high for an industry, it
likely means new competitors show up frequently and gain traction without much difficulty. If the threat
is low, industries will likely see few new competitors. Even when new companies do enter the market,
they will find success harder to achieve.
High Threat of Entry of New Competitors When:
 Profitability does not require economies of scale
 Products are undifferentiated
 Brand names are not well-known
 Initial capital investment is low
 Consumer switching costs are low
 Accessing distribution channels is easy
 Location is not an issue
 Government policy is not an issue
Threat of New Entry is Low if:
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Profitability requires economies of scale
Products are differentiated
Brand names are well-known
Initial capital investment is high
Consumer switching costs are high
Accessing distribution channels is difficult
Location is an issue
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