PDSnet Glossary

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Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

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Definition

This is the cost of establishing a new business in a particular industry. Some industries require a considerable capital investment to be viable and so have a high entry threshold. For example, the underground mining industry typically requires a large investment before any income. Other industries, especially those in the service industries, tend to have a low entry threshold. This is especially true of internet-based businesses. The entry threshold of a business can be a major factor preventing new competitors from entering the business. The entry threshold can also be the required knowledge and expertise to make the business work. Anyone can establish a spaza shop on the side of the road, but it takes considerably more expertise and qualifications to establish a stockbroking firm or a medical practice.

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