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Options
- A
The business faces high threats from substitutes
-
Significant entry barriers for new competitors
Correct answer
- C
Both of the above
- D
None of the above
Why this is the answer
Entry barriers, such as patents, licensing, brand loyalty, or high capital requirements, protect businesses from potential new competitors, helping maintain stable profits. High threat from substitutes, however, increases competition and reduces profitability. Therefore, only significant entry barriers enhance shareholder value.
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