Government
Definition and examples of the barriers to entry a new business often faces
Barriers to entry are challenging but necessary business forces that ensure the highest quality products at the lowest prices for consumers.
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What are barriers to entry?
Every runner knows how easy it is to reach your destination when the path is clear and the surface level. But when obstacles are added—say a tree falls after a storm, cutting across the roadway—achieving your goal becomes much more challenging.
For a new business, the roadblocks that make it difficult to succeed are known as barriers to entry. New businesses often face these barriers head-on when entering a competitive marketplace. These barriers include financial obstacles, such as high start-up costs, regulatory hurdles like patent protections, or even consumer pressures, like brand loyalty. Add them together, and they could prove insurmountable: the Bureau of Labor Statistics reports that 45% of all businesses fail within their first five years—in the artificial intelligence industry, that number could be even higher.
Rarely do established businesses roll out the welcome mat for a newcomer—they’re motivated to enact barriers to entry by exerting pressures on the new business in order to limit competition and, thus, protect their market share.
Some industries, like pharmaceuticals, have their own unique set of barriers to entry: In order to produce a new cancer treatment, for instance, a drug manufacturer must spend millions on research, development, and clinical trials. It then needs to gain approval from the U.S. Food and Drug Administration (FDA) so it can produce and sell the drug, which itself is a lengthy process (six months or longer, if revisions are necessary), further adding to their costs.
Related: What Is Disruptive Innovation? Definition & Examples
Examples of barriers to entry in business
A new business can face headwinds at nearly every phase of start-up operations, from securing funding to obtaining licenses, manufacturing products efficiently, and ultimately finding customers willing to give their products a try.
Government barriers to entry
In an ostensibly free market economy, like the U.S., where supply and demand rule the day, the government’s role is to encourage or even offer incentives to new businesses, while at the same time enforcing regulatory oversights to protect consumers. Often, businesses in industries that receive strict regulations have the steepest barriers to entry because they must obtain licensing or regulatory approval in order to operate.
A taxi driver in 2016, for example, had to pay $2,000 in fees and go through a 33-step process in order to be licensed in Washington, DC, which greatly hindered cab companies’ attempts to compete with ride-sharing apps like Uber and Lyft.
In addition, established businesses might receive tax benefits or patent protections from the government, both of which could pose challenges to new businesses.
Competitive barriers to entry
Older businesses could employ strategies that intentionally add barriers to entry, making it difficult for a new business to become established. Through predatory pricing practices, for instance, one business intentionally lowers prices to drive out the competition.
Established businesses considered heavyweights in their respective fields often monopolize resources: Standard Oil controlled 95% of the oil produced in the United States at the turn of the century, and while it took an act of Congress to split it up, its descendants, Chevron (CVX) - Get Free Report and ExxonMobil (XOM) - Get Free Report continue to profit from tight capacity and never-ending demand.
Lobbying efforts from business factions can also serve as barriers to entry, as they advocate for more or even stricter government oversight, effectively putting new businesses into a stranglehold.
Operational barriers to entry
The examples discussed above are external to a business, but new businesses also face internal challenges that could serve as barriers to gaining market share. These include:
- High startup costs: The business may need to secure funding from angel investors, through a bank via financing, or even from the general public, which is known as crowdsourcing.
- Economies of scale: It’s not enough for a new business to begin production; it must source resources and establish processes to create products efficiently. Once these are in place, it can roll out greater quantities of products at a lower cost.
- Customer loyalties: It may seem puzzling to list a devoted fanbase as a barrier to entry, but customers can be quite set in their ways. As such, it may take an investment of time, advertising dollars, and incentives, such as discounts or free offers, to persuade buyers to change affinities.
Why are barriers to entry important?
In a perfect world, barriers to entry would not exist. Companies would sell identical products, and every business would have an equal market share.
But this world is far from perfect—in fact, instead of a level playing field, monopolies exist, hogging market share and obstructing opportunity. Think about Amazon (AMZN) - Get Free Report as a retailer, or Alphabet (GOOGL) - Get Free Report on the internet. Do monoliths like these always act in the best interest of their customers?
Barriers to entry are therefore challenging but important forces businesses must contend with in a game of survival of the fittest. They maintain industry thresholds of quality and integrity and thus prevent inferior products from coming online.
How can barriers to entry be lowered or reduced?
It all comes down to innovation. When a company produces a product that’s so outstanding that it disrupts business as usual and satisfies the ever-changing needs of consumers—we’re talking tipping point moments like Microsoft’s Windows technology or Edison’s light bulb—barriers to entry can be lowered or even avoided altogether, and the world is never the same.
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Government
Low Iron Levels In Blood Could Trigger Long COVID: Study
Low Iron Levels In Blood Could Trigger Long COVID: Study
Authored by Amie Dahnke via The Epoch Times (emphasis ours),
People with inadequate…
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Authored by Amie Dahnke via The Epoch Times (emphasis ours),
People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.
A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.
Long COVID Patients Have Low Iron Levels
Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.
In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.
According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.
But it can jeopardize a person’s recovery.
“When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”
The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.
“It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”
The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.
1 in 5 Still Affected by Long COVID
COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.
Government
Walmart joins Costco in sharing key pricing news
The massive retailers have both shared information that some retailers keep very close to the vest.
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As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters.
The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.
The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.
Related: Popular mall retailer shuts down abruptly after bankruptcy filing
It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.
You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.
Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.
However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.
Image source: Joe Raedle/Getty Images
Walmart sees lower prices
McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.
During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.
"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.
He was specific about where the chain has seen prices go down.
"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."
McMillon said that in other areas prices were still up but have been falling.
"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.
Costco sees almost no inflation impact
McMillon avoided the word inflation in his comments. Costco (COST) Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.
The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.
"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.
Galanti made clear that inflation (and even deflation) varied by category.
"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.
bankruptcy pandemic trumpGovernment
Walmart has really good news for shoppers (and Joe Biden)
The giant retailer joins Costco in making a statement that has political overtones, even if that’s not the intent.
Share this:
As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters.
The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.
The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.
Related: Popular mall retailer shuts down abruptly after bankruptcy filing
It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.
You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.
Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.
However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.
Image source: Joe Raedle/Getty Images
Walmart sees lower prices
McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.
During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.
"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.
He was specific about where the chain has seen prices go down.
"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."
McMillon said that in other areas prices were still up but have been falling.
"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.
Costco sees almost no inflation impact
McMillon avoided the word inflation in his comments. Costco (COST) Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.
The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.
"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.
Galanti made clear that inflation (and even deflation) varied by category.
"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.
bankruptcy pandemic trump
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Students lose out as cities and states give billions in property tax breaks to businesses − draining school budgets and especially hurting the poorest students
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Low Iron Levels In Blood Could Trigger Long COVID: Study
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