CAF-7 · Chapter 4 · Question 1 of 15
In Porter’s Five Forces model, which of the following industry characteristics would result in the 'Threat of New Entrants' being classified as low?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The existence of strong patents and proprietary technology held by existing firms
Explanation
Strong patents, proprietary technology, and high capital requirements act as significant barriers to entry. When barriers to entry are high, the threat of new entrants is low, protecting existing firms in the industry.
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