Retaliation

• Companies seeking to enter an industry also anticipate the reactions of firms in the industry.
• An expectation of swift and vigorous competitive responses reduces the likelihood of entry.
• Vigorous retaliation can be expected when the existing firm has a major stake in the industry, when it has substantial resources, and when industry growth is slow or constrained.
• Locating market niches not being served by incumbents allows the new entrant to avoid entry barriers.
• Small entrepreneurial firms are generally best suited for identifying and serving neglected market segments.