By holding cost advantage, Singapore Power can turn it into an entry-deterring strategy by offering low electricity tariff. At the same time, the incumbent has chances to capture more market demand, thereby increase their market share. The Singapore Division of Singapore Power group has four related business units: Natural Barriers to Entry Barriers to entry can also form naturally as the dynamics of an industry take shape.
Brand identity and customer loyalty serve as barriers to entry for potential entrants. As a result, companies like Singapore Power cannot exit the industry without regulatory approval. By having a related diversified business portfolio with four related business units, Singapore Power will be able to vertically integrate its vertical chain to become more production-efficient by fully utilize and exploit its capacity of factory plants, machinery and equipment, enhance the coordination of its production flows through the vertical chain and prevent leakage of strategic technical know-how and private information to avoid technology and strategy replication.
Moreoever, PowerGas successfully extended the town gas network by 5.
Such public-service oriented company plays a significant role in fulfilling public needs and cannot be replaced in a short-term. Singapore Power would enjoy certain degree of customer loyalty Barriers to entry 3 essay it has been seen as a leading and reliable gas and electricity provider for nearly 15 years.
There are two types of barriers to entry: Moreover, with a larger scale of production, Singapore Power may also apply better organizational skills to its resources, such as a clear-cut chain of command, while improving its techniques for production and distribution.
Having been the major player in the electricity market for more than 10 years, Singapore Power distinguishes from entrants in their cutting-edge technology Singapore Power has continuously commissioned and deployed new technology to enhance the performance and reliability of the whole electricity network such as the installation of the wireless Supervisory Control and Data Acquisition SCADA system for remote monitoring of 6.
This creates an incentive for new firms to enter the market and attempt to capture some of these profits. Customers would tend to place uncertainty over the reliability, quality and services of entrants, and therefore, there would be low chances that they will switch to another electricity and gas provider.
Economies of scale enable incumbents to produce at a lower average unit cost as their production volume increases. Singapore Power, as many other large firms, is bound by some obligations that they must meet whether or not they cease operations.
Singapore Power gained its competitive advantage in the market because electricity industry is such a capital-intensive industry with very high upstart sunk costs that incumbent has incurred but the entrant has not.
If one of its business units falls to generate good profit, the other business units might be able to offset. What are barriers to entry?
Singapore Power would benefit from reduced risk level in the case of Singapore Power, as a result of being diversified. Ostensibly, this is done to protect the integrity of the industry and prevent new entrants from introducing inferior products into the marketplace.
It makes entry more difficult because requirements for licenses and permits may raise the investment and level of technological know-how needed to enter a market, creating an effective barrier to entry.
Other power generating and retailing companies in the market are held dependent on Singapore Power to function and provide electricity services. Other barriers to entry occur naturally, often evolving over time as certain industry players establish dominance. Sometimes the government imposes barriers to entry not by necessity but because of lobbying pressure from existing firms.
Exit barriers often stem from sunk costs, as in the case of Singapore Power, because large fixed costs are effectively sunk, the marginal cost of remaining operation is low and exit is less attractive.
Singapore Power has been providing electricity and gas transmission and distribution, and market support services to over a million industrial and domestic customers.
Generally, firms favor barriers to entry when already comfortably ensconced in an industry to limit competition and claim a larger market share.
The proper functioning of Singapore Power serves to maintain the whole electricity network of Singapore. If post-entry profits are less than the sunk costs of entry, the entrant will stay out.
All these result from the benefits of learning and accumulated knowledge about the industry enjoyed by Singapore Power. Not only will this reduce the profits being made, making it less attractive for entrants, but it also means that the incumbent is meeting more of the market demand, leaving any potential entrant with a much smaller market share.
Methods of strategic entry deterrence used by Singapore Power: The strategy is known as limit pricing. Closure costs include redundancy costs, contract contingencies with suppliers and the penalty costs from ending leasing arrangements for property.
Sunk costs therefore increase the risk and deter entry.Barriers often lead to your message becoming unclear and confusing to others. For communication to become more effective one has to overcoming these barriers to send a clear message.
Cultural Differences can be a barrier to communication because of the variations between cultures and the different background, beliefs and opinions of others.
Barriers to entry is the economic term describing the existence of high startup costs or other obstacles that prevent new competitors from easily entering an industry or area of business.
Barriers to Entry & Exit Essay Sample. Singapore Power was first created to take over the electricity and gas business of the state provider, the Public Utilities Board in and was once considered as the only electricity company in Singapore.
Barriers to entry D. Eco-efficiency Difficulty: Easy Learning Objective: 3 (p. 88) One of the most important steps a firm can take in achieving a competitive position with regard to. Barriers to entry are natural or legal restrictions that restrict the entry of new company into the business.
A monopolist faces no competition because of barriers of entry. Types of barriers will be discussed in detail in the next section. Essay on Entry Barriers of Global Marketing Entry Barriers in Global Marketing An understanding of the entry barriers to internationalization and their effect on entry mode selection is important because they can assist in determining why global marketers are unable to exploit their full potential and why many firms fail or incur financial.Download