What is the best indicator of whether potential entry is a strong competitive force?

The best indicator of whether potential entry is a strong competitive force is the easiness for new entrants to succeed. This concept relates to barriers to entry, which determine how quickly and effectively a new competitor can enter a market and begin to compete. When the market conditions are such that new entrants can easily overcome barriers like capital requirements, access to distribution channels, economies of scale, or customer loyalty, it significantly increases the potential for competition.

In industries where the entry barriers are low, new businesses can frequent the market, potentially eroding the market shares of established companies and increasing competitive pressure across the board. Hence, the characteristics that facilitate or hinder successful entry provide a direct insight into the competitive dynamics and the level of threat posed by new entrants.

While the strength of buyer loyalty, the strategies of existing industry members, and vacant spaces on the strategic group map can offer insights into market conditions, they do not serve as direct indicators of new entrants' ability to penetrate the market effectively. For instance, strong buyer loyalty may help existing firms, but it does not necessarily reveal how easily new companies could gain market proximity.