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Evaluating Sustainable Competitive Advantages: Entry and Exit Barriers

5 Pages Posted: 10 Oct 2015  

Baijnath Ramraika, CFA

Multi-Act EquiGlobe Limited

Prashant Trivedi

MAEG

Date Written: October 6, 2015

Abstract

The authors discuss entry and exit barriers and their interaction as basic building blocks of a decision making process for evaluating competitive advantage of a business. While the concept of entry barriers is much discussed in the context of high quality businesses, the authors posit that exit barriers are also very important and in many cases, may cancel the positive effects of entry barriers.

Through the examples of auto makers and airlines, the author show that when strong exit barriers coincide with a high fixed cost structure, the returns on capital frequently end up in poor territory.

Keywords: High Quality, Competitive Advantage, Entry Barriers, Exit Barriers, Auto Makers, Airlines

JEL Classification: L10, L62, L72, L93

Suggested Citation

Ramraika, CFA, Baijnath and Trivedi, Prashant, Evaluating Sustainable Competitive Advantages: Entry and Exit Barriers (October 6, 2015). Available at SSRN: https://ssrn.com/abstract=2671741 or http://dx.doi.org/10.2139/ssrn.2671741

Baijnath Ramraika, CFA (Contact Author)

Multi-Act EquiGlobe Limited ( email )

1102, The Core
No. 62, ICT Avenue, Cybercity
Ebene, Mauritius 72201
Mauritius
2304681188 (Phone)

HOME PAGE: http://www.symantaka.com/

Prashant Trivedi

MAEG ( email )

3rd Flr, Trade Centre Bldg
North Main Road, Koregaon Park
Pune, Maharashtra 411001
India

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