A startup company is thinking of launching a low cost detergent powder in the market. The market for the said product is already dominated by big FMCG players. As a strategic professional put forward your suggestions to

Answer 5(b) A startup company thinking of launching a low cost detergent powder in the market has to face a few threats in establishing itself in the market. The new entrant to an industry typically bring to it new capacity, a desire to gain market share and substantial resources. Therefore, the threat to the entry for the said startup company may depend on the presence of entry barriers and the reactions that can be expected from existing competitors. Thus, there are obstructions for the said company that makes it difficult to enter an industry. Some of the possible barriers to enter the industry are as follows: Economies of scale - The established players have significant cost advantages over any new rival. Product differentiation - it creates huge entry barriers through high levels of advertising and promotion. Switching cost - It becomes difficult for new companies to persuade customers to switch to a new product. Access to distribution channels - Startups quiet often witnesses the difficulty of securing shelf space in retail shops. Government policy - Government can limit entry into an industry through licensing requirements by restricting access to raw materials etc.