ABSTRACT
This chapter contains barriers and profitability matrix; the principles on which it is based; underlying assumptions; guidance on application, and relevant issues; and related models. The model shows how organizations' returns vary with the strength of market exit and entry barriers. The magnitude of organizations' returns depends significantly upon the strength of market exit and entry barriers. High entry barriers with low exit barriers can be the best position for the established organization. The worst position for organizations can be in a market exhibiting low entry barriers and high exit barriers. Entry barriers can change over time due to, for example, expiry of patents and licensing agreements, the formation of strategic alliances and the organization's developing skill. The model may be used to predict competitor behaviour with regard to a new or existing market, given existing entry and exit barriers.
