hello and welcome to dg8.com in this video we are going to cover the topic on barriers to entry now let's start with what are barriers to entry barriers to entry are obstacles that deter a firm from joining a market these can be licensing start-up costs patents government regulation and technology hurdles barriers to entry help companies that already exist in the market they prevent rivals from entering a market they can thus impact prices these have to be thought out while devising an anti-trust policy barriers to entry can result in or contribute to monopolies and oligopolies they give firms market power moving on the types of barriers to entry first agreement between distributors specific arrangements between leading retailers or distributors make it harder for other manufacturers to enter the industry thus manufacturers have complete control towards the end of the supply chain next intellectual property patents provide companies with the legal ability to prevent other companies from manufacturing a product for a select time trade marks might also be an entrance hurdle for any service or product most of the market is captured by one or more famous brands moving on to the next one agreement between suppliers special arrangements with essential parts of the supply chain make it hard for other manufacturers to enter the industry an example would be a suppliers launching exclusive kind of products next switching cost often it becomes costly for consumers to change their providers goal of course switching is to deter purchasers from switching suppliers next tariffs tariffs are majorly import taxes that deter the entry of foreign players in the market tariffs are majorly put into place to protect the domestic markets that are nascent in stage next zoning governments permit certain business activities in one place and ban others this gives firms exclusive rights to operate in specific zones as marked by the government next the aspect of economics of scale advantages of price make the competition high stakes affair this can prevent or hinder new entries in the market next in line are government restrictions these involve orders from the government enforced by law and overseen by the relevant authority it curtails the actions of those overseen by authority next marketing pre-existing companies can try and deter competition by investing in marketing new entrants might not be able to spend as much or have enough workforce to counter next the top down integration a firm overseeing multiple production levels can be a barrier to entry the firms will only do things that give preference to itself at each level rivals will have to function at each one of those levels to enter the market r d incumbent firms will strategically invest in r d this creates a hurdle for new entrants it indicates an increase in industrial economies of the scale which makes the entrance lack of resources to enter the market next predatory pricing some companies sell their products at a lower price bearing a loss to deter competition rivals might not be able to lose as much as money as a pre-established company can this is because big firms might have credit or cash reserves ready next the aspect of multiple rivals if at a time more rivals are entering the market it is easier to enter a market the chances of a successful entry into a market where many competitors are trying and failing are in fact relatively low and finally technological innovation it can be hard to gain from economics of scale where high levels of technology are needed speed to technological change can deter players from entering and settling in a new market now moving on to the barriers to entry classification michael porter has classified the markets into four general types first high entry barrier high exit barrier next high entry barrier low exit barrier the third low entry barrier high exit barrier and fourth low entry barrier and low exit barrier moving on to barriers to entry in different markets falling markets have a combination of these features first markets with high entry barriers have few players and thus high profit margins next markets with low entry barriers have many players and thus low profit margins markets with high exit barriers are not self-regulated thus profits fluctuate on the other hand markets with low exit barriers are self-regulated thus profits don't fluctuate next higher the barriers to entry and exit the market would be a natural monopoly because new players won't get an entry and the existing ones won't leave and finally lower the barriers to entry and exit the market would witness perfect competition on to barriers to entry examples the first starbucks barriers to enter australia differences in american and australian coffee culture unlike in the us people in australia like to sit at one spot for a long time and enjoy their coffee whereas starbucks is typically famous for takeaways on the other hand competition from local grown cafes in australia was another deterring factor for starbucks next example of walmart's barrier to enter in india walmart has always sold directly to customers but this approach for india is not a good idea there are restrictions on the extent to which investment can come from abroad india allows only 51 fdi investments for multi-brand retail stores india is careful not to disrupt retailers who form the unorganized sector in india walmart moved away from selling to customers directly by opening cash and carry wholesale format stores known as best price coupled with that is the intense competition of market leaders such as reliance retail and amazon.com and the final example of test last barrier to enter in india first reason slow electric vehicle market a bloomberg study claims that the electric vehicles have less than one percent of market share in india therefore the real hurdle for tesla will be to craft out a position for itself in the combustion indian dominated automobile market in india second subsidies and infrastructure for charging india's attempts to raise ev demand failed before china's because of lack of subsidies china's state bank companies have large investments into creating charging stations the country also has massively subsidized electric vehicle purchases third india's consumer base and pricing issues the upper limit for an electric vehicle to be eligible for subsidies in india is around twenty thousand dollars tesla's affluent offerings will not be eligible for ev subsidies in india the cheapest china built tesla model 3 begins at roughly 41 thousand dollars a bloomberg report claims three fourth of the indian auto sales happen in the 10 000 range or less and finally issues with the range of the car potential consumers electric vehicles are nervous about the range the electric vehicle might offer they just want cars that let them get to where they wish to go without the battery losing charge issue so that's it folks this brings an end to the topic on barriers to entry these are some of the sources and links referred to for the content in the video thank you and see you in the next video