4. Barriers to Entry When a business is profitable, it attracts potential entrants who want to gain market share. Additionally, it may have a negative impact on the profitability of existing businesses. The likelihood of new firms entering an industry depends on the extent to which barriers to entry have been erected. In other words, existing companies in the sector put in place multiple constraints to limit the number of potential entrants. Within the automotive industry, the threat of new entrants is low, due to high barriers to entry. One of the biggest constraints is the need to invest large sums of money. Start-up capital is needed to hire and train employees, purchase facilities and raw materials. As the automobile manufacturing sector is quite complex, it is necessary to invest in the latest innovations, research and development. Given the nature of the business, new entrants must be able to achieve economies of scale. These savings occur when companies work to simplify their product lines to reduce unit cost for larger volumes. This could pose a major hurdle that would force the new automaker to accept a cost disadvantage. The new arrival must find suitable means of distribution. This can sometimes be difficult because existing companies may have close and exclusive relationships with distributors. In this case, the new company must build its own distribution channel. Another significant barrier faced by newcomers is brand recognition. Gaining customer trust and recognition takes a lot of time. Additionally, new entrants may need to invest significant amounts in advertising, focus on producing good quality products, and providing good customer service. In 1986, the globally recognized Korean automobile manufacturer Hyundai entered the American market. At that time, the economic situation was favorable for launching a new business. However, Hyundai was not