Question：In Porter's five forces model, which TWO of the following would not constitute a 'barrier to entry'?
A. Loyalty to existing brands
B. Low capital investment requirements
C. Low switching costs in the market
D. Scale economies available to existing competitors
The correct answers are:
Low switching costs in the market
and
Scale economies available to existing competitors
Rationale: Low switching costs means that it will be easy for customers to change from existing suppliers to a new supplier: this would facilitate entry to the market, as would low start-up costs, therefore it is not a barrier to entry.
The other options should clearly pose difficulties to a new entrant: not yet big enough to benefit from economies of scale (against competitors who are); high degree of recognition of and loyalty to existing brands.
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