Tuesday, October 25, 2016

Barriers to Entry

The concept of 'Barriers to Entry' was interesting to learn about as I read Michael Porter's book 'Competitive Advantage' many years ago.  Starting a business in Hungary, as an English only American has presented some large challenges, from laundry & haircuts to hiring & taxation. Hungary, especially rural Hungary, has a low cost and well skilled labor force as demonstrated by the presence of large factories set-up by international companies, such as Electrolux, Bosch, Samsung, and many others that overcame barriers to entry to get access to this desirable labor force.

I know first hand the frustration of the language barrier while trying to learn the rules of the game and set-up a business,  But the main question I have to answer is:  Are these difficulties short-term and once overcome, will result in a competitive business, or are they a long-term cost of doing business which will take away much or all of the advantages of the low cost labor?  In other words, are these challenges a case of a Michael Porter 'Barrier to Entry' with a profitable business opportunity waiting on the other side of the barriers or is this just an impractical venue for a small America business? This is what I need to figure out.

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