Barriers to exit

Barriers to exit,

Definition of Barriers to exit:

  1. A company may decide to exit a market because it is unable to capture market share or turn a profit. The dynamics of a particular industry or market may change to such an extent that a company may see divestiture or spinoff of the affected operations and divisions as an option. However, circumstances, including internal and external, regulations, and other impediments, may prevent the division or inter-related business from being divested.

  2. Perceived or real impediments (such as a significant number of loyal customers, or large sums invested in highly specialized assets) that keep a firm from quitting uncompetitive markets or from discontinuing a low-profit product.

  3. Legal restrictions placed on the right of certain industries (or on industries in certain localities) to close down their operations and redeploy their resources in more fruitful ventures. While such measures are designed to protect dependent communities from economic collapse or discomfort they, paradoxically, often end up as barriers to entry.

  4. Barriers to exit are obstacles or impediments that prevent a company from exiting a market in which it is considering cessation of operations, or from which it wishes to separate. Typical barriers to exit include highly specialized assets, which may be difficult to sell or relocate, and high exit costs, such as asset write-offs and closure costs. A common barrier to exit can also be the loss of customer goodwill.

How to use Barriers to exit in a sentence?

  1. Barriers to exit are obstacles or impediments that prevent a company from exiting a market or industry.
  2. Typical barriers to exit include highly specialized assets, which may be difficult to sell or relocate, and high exit costs, such as asset write-offs and closure costs.
  3. The government can be a barrier to exit if a company is highly regulated or received tax breaks for moving to a location.

Meaning of Barriers to exit & Barriers to exit Definition