Competitive pressures associated with the threat of entry are greater in all of the following situations except when

Question

BlackTom AI · Accepted Answer

The question asks us to identify the situation in which competitive pressures from the threat of entry are not greater, i.e., the exception.
Option 1: 'incumbent firms are willing to strongly contest the entry of newcomers with moves designed to make entry unprofitable.' When incumbents actively and effectively defend the market by making entry unprofitable, the threat of entry faced by potential entrants is reduced rather than amplified. This scenario lowers, not raises, entry pressures, so it fits the idea of the exception.
Option 2: 'a large pool of potential entrants exists, some of which have the capabilities to overcome high entry barriers.' A large pool of entrants with the ability to overcome barriers increases the likelihood of new competitors entering, raising the pressure from the threat of entry. This aligns with greater entry pressure, so it is not the exception.
Option 3: 'entry barriers are relatively low and buyer demand for the product is growing rapidly, and newcomers can expect to earn attractive profits without inviting a strong reaction from incumbents.' Low entry barriers and strong demand create favorable conditions for new entrants, and if incumbents do not pose a strong defense, entry pressures rise. This situation increases the threat of entry, so it is not the exception.
Option 4: 'existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence.' When incumbents themselves expand, it can raise overall competitive intensity, but it does not inherently increase the external threat of entry from new entrants. This scenario may reduce the relative impact of entry by incumbents expanding, so it can be argued as not increasing entry pressures in the same way as a high-potential entrant pool would. Therefore, it can be consistent with being an exception depending on interpretation, but the clearest exception remains option 1.
Option 5: 'customers have low brand preferences and low degrees of loyalty to seller.' Low brand loyalty makes it easier for entrants to attract customers, increasing entry pressure. This increases the threat of entry and is not the exception.
In summary, the scenario that most clearly reduces or eliminates the pressure from the threat of entry is when incumbents actively contest and deter entry, i.e., option 1. The other options describe conditions that tend to elevate entry threats rather than diminish them.

Competitive pressures associated with the threat of entry are greater in all of the following situations except when

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Question at position 21 Licensing costs and legal requirements are a barrier to entry for Netflix in global markets.TrueFalse

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