Barriers to Entry

Barriers to Entry

Barriers to Entry Jonathan Poland

Barriers to entry refer to factors that make it difficult for new companies to enter a particular market. These barriers can take many forms, including technological know-how, government regulations, reputation, location, and the need for large investments or specialized assets. When barriers to entry are high, it can allow existing firms in the industry to maintain a strong market position and charge higher prices due to their market power. In extreme cases, high barriers to entry can lead to the formation of a monopoly, where a single firm controls the entire market and can charge high prices without fear of competition.

Examples of barriers to entry:

  1. Intellectual property: Patents, trademarks, and copyrights can be used to protect intellectual property, making it difficult for new competitors to enter the market.
  2. Economies of scale: Companies that have already achieved a large scale of production may have cost advantages over smaller competitors, making it difficult for them to enter the market.
  3. Network effects: When a product or service becomes more valuable as more people use it, new competitors may find it difficult to enter the market because they cannot attract enough users to generate the same value as the existing players.
  4. Government regulation: Regulations and licensing requirements can create barriers to entry, particularly in industries that are heavily regulated, such as healthcare and financial services.
  5. Access to distribution channels: Established firms may have established relationships with distributors and retailers, making it difficult for new competitors to gain access to these channels.
  6. Customer loyalty: If customers are highly loyal to a particular brand, it can be difficult for new competitors to attract these customers and gain a foothold in the market.
  7. Supplier relationships: Established firms may have longstanding relationships with suppliers, making it difficult for new competitors to secure the necessary raw materials or components.
  8. High startup costs: Industries that require large investments in equipment, research and development, or marketing may have high barriers to entry for new competitors.
  9. Legal barriers: Legal contracts, such as exclusive agreements or non-compete clauses, can create barriers to entry by preventing new competitors from entering the market.
  10. Industry consolidation: When a few large firms dominate an industry, it can be difficult for new competitors to enter and compete effectively.
  11. Reputation: Established firms may have a strong reputation in the market, which can make it difficult for new competitors to gain credibility and attract customers.
  12. Customer acquisition costs: Industries that require significant marketing and sales efforts to attract customers may have high barriers to entry for new competitors due to the costs associated with acquiring new customers.
Learn More
Long Tail Model Jonathan Poland

Long Tail Model

The long tail refers to a business model that allows a large number of niche products or services to be…

Project Metrics Jonathan Poland

Project Metrics

Project metrics are methods for measuring the progress and performance of a project. They are typically tracked continuously in order…

What is a Tagline? Jonathan Poland

What is a Tagline?

A tagline is a short, catchy phrase that is used to summarize the core message or value proposition of a…

Bliss Point Jonathan Poland

Bliss Point

The concept of a “bliss point” refers to the amount of consumption of a particular good or service that maximizes…

Digital Channels Jonathan Poland

Digital Channels

A digital channel is a means of distributing or selling products or services electronically, as opposed to through physical channels…

Contract Awards Calendar 150 150 Jonathan Poland

Contract Awards Calendar

Governments around the world typically follow a structured and organized process for awarding contracts to suppliers, contractors, and service providers.…

Stability Jonathan Poland


Stability is the ability of a system, organization, or individual to maintain its current state or condition despite external pressures…

What is the Broken Window Fallacy? Jonathan Poland

What is the Broken Window Fallacy?

The broken window fallacy refers to the idea that the economic benefits of destructive events, such as wars and natural…

Volatility Risk Jonathan Poland

Volatility Risk

Volatility risk is the possibility that changes in the volatility of a risk factor will lead to losses. Volatility is…

Latest Thinking

Qualified Small Business Stock (QSBS) Jonathan Poland

Qualified Small Business Stock (QSBS)

Qualified Small Business Stock (QSBS) refers to a special classification of stock in the United States that offers significant tax…

Barrick Gold Jonathan Poland

Barrick Gold

Barrick Gold Corporation (NYSE: GOLD) is a significant player in the global economy, particularly within the gold mining industry. Its…

Newmont Corporation Jonathan Poland

Newmont Corporation

Newmont Corporation (NYSE: NEM), being the world’s largest gold mining corporation, with extensive operations in mining and production of not…

Gold is Money Jonathan Poland

Gold is Money

Overview The history of gold as money spans thousands of years and has played a pivotal role in the economic…

What is Leadership? Jonathan Poland

What is Leadership?

In the modern business world, where rapid changes, technological advancements, and global challenges are the norm, effective leadership is more…

Product Durability Jonathan Poland

Product Durability

A durable product, often referred to as a durable good, is a product that does not quickly wear out or,…

Durable Competitive Advantage Jonathan Poland

Durable Competitive Advantage

The most important aspect of durability is market fit. Unique super simple products or services that does change much if…

Praxeology Jonathan Poland


Praxeology is the study of human action, particularly as it pertains to decision-making and the pursuit of goals. The term…

Business Models Jonathan Poland

Business Models

Business models define how a company creates, delivers, and captures value. There are numerous business models, each tailored to specific…