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Exit Barriers
Obstacles that make it difficult for a company to leave an industry.
Implications
Factors that make it difficult or costly for a company to leave an industry or market, such as high fixed costs, long-term contracts, or loss of brand equity, often leading to continued operation despite declining profitability.
Example
Example: A manufacturing firm faces exit barriers due to expensive equipment that cannot be easily sold or repurposed, making it difficult to exit the market even as demand declines.
Related Terms
Different from entry barriers, which prevent new companies from entering a market, exit barriers trap existing companies in a market even when it is no longer profitable to remain.
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