When deciding whether a business concept is viable, it is essential to determine its competitive
advantage and whether it is strong enough. While a
company needs to do all of the following to be
successful, barriers to entry are particularly relevant
and must be carefully considered when attempting
to
sell to a market in which the
competition is succeeding but is not
so powerful as to make it
impossible for a new entrepreneur
to enter.
a
b
sell to a market that is large and
growing
sell to a market in which the
competition is able to make a profit
d
sell a product or service that solves
problems consumers may have
with the competition
e
sell a product or service at a
competitive price that will attract
customers

Dahlia enterprises needs someone to supply it with 127,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. it will cost you $940,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. you estimate that in five years, this equipment can be salvaged for $77,000. your fixed production costs will be $332,000 per year, and your variable production costs should be $11.00 per carton. you also need an initial investment in net working capital of $82,000. if your tax rate is 30 percent and your required return is 11 percent on your investment, what bid price should you submit? (do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))