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Question：In Porter’s five forces model, which of the following would not constitute a ‘barrier to entry’?
A.Scale economies available to existing competitors
B.High capital investment requirements
C.Low switching costs in the market
Answer：C
Rationale: Low switching costs means that it will be easy for customers to change from existing suppliers to a new supplier: this would facilitate entry to the market. The other options should clearly pose difficulties to a new entrant: not yet big enough to benefit from economies of scale (against competitors who are); high start-up costs; high degree of recognition of and loyalty to existing brands.
Rationale: Low switching costs means that it will be easy for customers to change from existing suppliers to a new supplier: this would facilitate entry to the market. The other options should clearly pose difficulties to a new entrant: not yet big enough to benefit from economies of scale (against competitors who are); high start-up costs; high degree of recognition of and loyalty to existing brands.
