Threat of New Entrants

The Threat of New Entrants refers to the potential for new companies to enter an industry and compete with established businesses. When it's easy for newcomers to start a business—due to low costs, few regulations, or access to technology—the threat is higher. This can lead to increased competition, which may force existing companies to lower prices or improve their services. However, if there are significant barriers, such as high investment costs or strong brand loyalty, the threat diminishes. Understanding this threat helps businesses strategize to maintain their market position.