Potential entry of new competitors
“New firms in an industry put downward pressure on prices, upward pressure on costs and an increased necessity for capital expenditures in order to compete. The less threat there is from firms entering the industry, the more stable a firm’s profits are.” (valuationacademy.com, 2010-1017)
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As a Company that sells different kind of finished products, we need to take into account that if there is a high threat of new entrants to the industry, it means that there are low barriers to entry and with this a huge possibility that the industry profit will decrease.
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Also we need to consider how new firms that enters into the business may bring new and innovative expertise to the industry, the new ideas of diversification of the new competitors, what is the competitive advantages, if it increased or decreased the demand for those companies and for ours. We also need consider that it is better for every estrablished company to attempt any new competitors for emerging than to control them.
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Sources:
https://www.cleverism.com/threat-of-new-entrants-porters-five-forces-model/