Threat of new entrants

How easily a new competitor can arrive, which is the force that erodes returns fastest when it runs against you.

Barriers come from capital requirements, regulation, distribution access, brand, technology and scale. Each can be tested rather than asserted. The best test is history: how many entrants have appeared in the last decade, and what happened to them?

Capital is the weakest barrier of the set, because capital is abundant and arrives precisely when returns are high. Indian speciality chemicals learned this, as did every commodity cycle before it.

High returns attract entry. That is the base case, and durability is the claim to prove.