Bus 604 Entry Strategies

There seems to be so many different entry strategies in business today. However, the key factor in developing a strong entry strategy is driven by the type of business and marketplace. Three common entry strategies in an oligopoly market structure is, (1) Advertising/Marketing: competitors could have saturated the market giving no chance for a new business to establish their presence. By completing advanced analysis such as the game-theory matrix; businesses can see how much profit will be lost due to advertising/marketing (2) Limited Pricing: established businesses sell their product or services at lower prices than the new entrant business are able to do which results in lower profits or maybe no profits at all. Before a new businesses reduces their prices to stay competitive they need to consider what the ceiling price is within their market as well as price elasticity and (3) Start-Up Costs: many of these capital costs are seen as sunk costs because a business usually cannot recover these expenses which cuts into their profitability. Again, advanced analysis should be completed to see exactly what the increased break-even output (Gwin, 2001).
The advertising and marketing entry strategy intrigues me because of the different aspects that need to be considered such as, targeted marketplace, consumer behaviors and preferences as well as brand loyalty. All of these considerations should be measured and evaluated before launching any type of advertising campaign. On the flipside, limited pricing is a higher risk as a barrier of entry because on the average newer business cannot afford to lower their profitability due to all the start-up costs incurred. While established businesses usually have deeper pockets and lower operating because of their customer loyalty, suppliers and basically being in business longer.

Reference

Barringer, B.R., & Ireland, D.R. (2010). Entrepreneurship: Successfully launching new ventures
(3rd ed.). Upper Saddle