8. Which competitive force is reduced by the barriers provided by government policies, capital requirements, brand identification, and cost disadvantages
Answer: C
The competitive force reduced by barriers such as government policies, capital requirements, brand identification, and cost disadvantages is the threat of new entrants.
Barriers to entry effectively reduce the likelihood of new competitors entering the market, thus diminishing the threat of new entrants. These barriers create challenges that potential entrants must overcome, making it less attractive to compete in the industry.
A) Threat of customer power
The threat of customer power refers to the ability of customers to influence pricing and quality. This force is not significantly affected by barriers to entry; instead, it is more related to the availability of substitutes and the number of customers in the market.
B) Threat of substitutes
The threat of substitutes involves alternative products that can fulfill the same need. While barriers to entry can impact the overall market competition, they do not directly reduce the threat posed by substitutes already available to consumers.
C) Threat of new entrants
Barriers such as government policies, capital requirements, brand identification, and cost disadvantages directly reduce the threat of new entrants by making it difficult for new companies to establish themselves in the market. These factors create a challenging environment for potential competitors, thus safeguarding existing firms.
D) Threat of supplier power
The threat of supplier power concerns the ability of suppliers to influence prices and terms. This force is influenced by the number of suppliers and the uniqueness of their products rather than barriers to entry, which primarily affect new competitors.
Conclusion
The correct answer is C, as barriers to entry directly mitigate the threat of new entrants by imposing significant challenges that deter potential competition in the market. Other options, such as customer power, substitutes, and supplier power, do not share this direct relationship with the barriers created by government policies and other factors, highlighting why C is the only appropriate choice.