2. Treat of Entrants. New entrants into an industry compete with established companiesplacing downward pressure on prices and ultimately profits. In the last century, Japaneseautomobile manufacturers Toyota, Honda, and Nissan represented formidable new entrants to the U.S. market, threatening the market position of established U.S. players GM, Ford,and Chrysler. The existence of substantial barriers to entry helps protect the profit potential of existing firms and makes an industry more attractive.
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