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tential Entry of New Competitors As above, Thompson (2005, pp. 55-8) described the factors affecting the strength of the competitive threat of potential entry in a particular industry, listed and score them for the fast food industry in below table: Indicators Case facts Score The size of the pool of likely entry The case did not provide too much information on that, however, it did provide 'Market share for fast-food sandwich Chain, 1998-2002' (MARINO, 2005-p.6) from this information provided by this table, during the 5 years, there is no new companies emerged, so the size of the pool of likely entry is low 2 The presence of sizable economies of scale As the data provided by the case, In US domestic market, Top 5 chains accounted for 71.70% of sales, and top 10 chains accounted for around 90% of sales (MARINO, 2005, p. 57), and most of them enjoy cost advantages associated with large scale of operation, so the score in this aspect will be very low. 2 Cost and resources disadvantages not related to size Thompson (2005, p. 57) described it as 'Existing firms may have low unit costs as a result of experience or learning curve effects, key patents, partnership with the best and cheapest suppliers of raw materials and components, etc. From the information provided by the case, it was quite difficult to get patents for the product or menu in the fast food industry, otherwise, Wendy's value menu will not be readily copied by other companies. However, most of the companies in the fast food industry had existing outlets, most of them are in favorable locations, so In the aspect, the score should be moderate. 4 Brand preferences and customer loyalty Again this is one of the very higher barrier to the new entry, all the major players in the fast food industries spend numerous efforts to improve their brand awareness and forge bonds with their customers, that is why top 5 chains accounted for 72% of sales in the whole fast food industry. 1 Capital Requirements The capital described by Thompson (2005, p. 57) includes the investing in the necessary manufacturing facility and equipment, being able to Finance the introductory advertising and sales promotion campaign to build brand awareness and establish a clientele, etc. Again the cost to establish a restaurant might be affordable, but the cost to launch the promotion campaign could easily cost millions dollars. 3 Access to distribution channels The fast food industry directly sales the foods to their customers through their outlets, the new entry had to either establish a new store which is rarely, as most of favorable locations had been occupied by incumbents, or acquire the existing one from the incumbents which will be very costly, so the score in this dimension will be low too 1 Regulatory policies/Tariffs and international trade restrictions Obviously there are not too many existing policies hurdle the new entries, however, some stringent sanitary requirements in food industry itself will be costly to reach. 5 Average 2.3 From the above analysis and score, the threat of new entrants was low for fast food industry in US market. Competitive pressures from the sellers of substitute products. Thompson (2005, p. 59) described the 3 factors decided the strength from the sellers of substitute products, listed and score it respectively in below table: Indicators Case Facts Score Substitutes readily available and attractively priced As case mentioned the food service market can be