Question

A. Discuss the major barriers to entry into an industry.

B. Do a restaurant have any barries to entry? what are they?

Answer 1

A. The major barriers to entry into business are:
1. Economies of scale: Keeping cost at low by producing more output
2. High start up costs: Requirement of high investment
3. Special benefits for the established firms
4. Strong Brand Identity
5. Customer loyalty

B. Restaurant businesses have low barriers to entry but some of them significant are:
1. High start up costs: Because of high start up capital in terms on investment on land and other fixed expenses, the industry needs more capital to start a business
2. Strong Brand Identity and customer loyalty: In order to avoid risks associated with the new entrants’ people would recognise established restaurants than new one.