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THREAT OF ENTRY.New entrants bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete. -For example; when new entrants are diversifying from other markets, they can leverage existing capabilities and cash flows to shake up competition. When the threat is high must hold down their prices- for example, relatively low entry barriers mean that Starbucks must invest aggressively in modernizing stores and menus. It is the threat of entry, not whether entry actually occurs, that holds down profit ability.
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