Competitive pressures from new entrants are weaker when?

Competitive pressures from new entrants tend to be weaker when the industry outlook is risky. A risky industry environment signals uncertainty in profitability and sustainability, which can deter potential competitors from entering the market. New entrants are likely to evaluate not just the existing competition but also the long-term prospects of the industry. If the outlook appears unstable or presents significant challenges, this discourages new competitors who may be hesitant to invest resources into a venture with uncertain returns.

In contrast, the other conditions listed pertain to factors that typically enhance barriers to entry, such as the number of potential candidates or the presence of multiple entry barriers. While these factors can play a role in shaping the competitive landscape, the key factor that weakens competitive pressure is the perception of risk in the industry, which directly influences the decisions of potential entrants. Therefore, the overall risk associated with entering the market is a crucial determinant of whether new competitors will choose to step in or remain at bay.