Gateways to entry

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Authors: G.S. Yip

Publication Year: 1982

Source: https://hbr.org/1982/09/gateways-to-entry

Title: Gateways to entry

Publisher: -

Edition: -

ISBN: -

Categories: Information Management, Organizational Behavior


Abstract

The author argues that the same factors that give rise to market barriers may be exploited by new entrants to the market. Yip identified and evaluated a number of market barriers: economies of scale product differentation absolute cost access to distribution, capital requirements incumbent reaction, where the incumbent is the existing player already operating on the market. These barriers can deter entrants from entry into the market all together and/or they could prevent success for the new entrant into the market when entering. To reduce or avoid barriers, Yip offers two strategic approaches. Firstly, using the same strategy; entrants that are already operating in other markets can transfer capabilities , use existing skills and resources as platform and may have advantages of lateness e.g. latest technology, greater economies of scale when entering a new market. Secondly,using different strategy entrants can exploit technological and environmental change, avoid direct competition by targeting another need, or negate barriers all together by changing accepted business structure. Finally, acquisition: is another gateway to enter and avoids barriers altogether. I thought this was an interesting article, that offers some insights into strategy for entering new markets and how to turn market barriers into gateways. In terms of the adaptive cycle, this is particularly useful in the exploiting phase of entrepreneurship in the cycle. It also shows how organizations, both new entrants and incumbents interact and could make use of environmental and technological change to their advantage.