Financial Analysis Essay Example | Topics and Well Written Essays - 250 words - 1

Financial Analysis - Essay Example They will have to use some money and time before recovering and making sales. Barriers to entry are conditions that stop or obstruct a potential competitors ambition to participate in the market. Several barriers to entry exist in other industries that allow certain firms to operate as a monopoly. Legal restrictions and licensing requirements from the government can restrict domestic or international competition (Dilek and Colakoglu, 2013). In addition, brand loyalty provides a barrier to entry, for instance, through product differentiation. It is difficult for people to compete with a valued brand like Coca Cola. The ability to control natural resources is another barrier to entry that facilitates a monopolistic market (Dilek and Colakoglu, 2013). For example, diamond-mining companies, such as De Beers, keep the value of diamonds high because they allow only limited mining of the natural resource. Fortunately, the barriers are contestable because other players in the market see the potential in the market and can fight for a place. Market forces are dominant enough to break a monopoly (Dilek and Colakoglu, 2013). Normally, a monopoly enjoys government protection, and for the case of Forrest, he have no protection, other than the fact that there are no boats. A perfectly competitive market results from a less contestable market. Even so, at times it these barriers are not contestable. A good example is the use of application software like Microsoft Word. Most people will use it simply because they want to enjoy compatibility with other users and face fewer challenges in its use. In such a case, the barrier to entry is not