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A startup can leverage the analytical tools discussed in the book in several ways to overcome entry barriers in an industry. Firstly, understanding economies of scale can help a startup plan its entry at a scale that allows it to compete effectively. Secondly, by analyzing product differentiation, a startup can identify opportunities to create unique offerings that can overcome established brand loyalties. Thirdly, understanding capital requirements can help a startup plan its financial strategy to meet these requirements. Fourthly, by understanding switching costs, a startup can develop strategies to make it easier and more attractive for customers to switch to their product. Lastly, understanding distribution channels can help a startup develop effective strategies to persuade these channels to carry its product.
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Economies of scale: High economies of scale make entry difficult. The newcomer has to enter at scale or suffer a price disadvantage. Product differentiation: New entrants must spend heavily to overcome established brand loyalties. This is seen in industries like baby care products and investment banking. Capital requirements: The need for large high-risk investments upfront can be a strong entry barrier. Switching costs: Switching costs are one-time costs like training and buying new equipment that buyers face while switching to a new product. If there are high switching costs, buyers will not shift to a new supplier unless there is a significant improvement in cost or quality. Access to distribution channels: New firms must persuade distribution channels to take up its product through measures like discounts and intense promotions. Limited channels and exclusive channel partnerships can further increase entry barriers, sometimes even force entrants to create new distribution channel...
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How do you out-perform competitors and acquire a better understanding of key profitability drivers in your industry? This book, by the legendary Micha...
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