4. Barriers to EntryWhen a company is profitable, it attracts potential competitors who wish to gain market share. Furthermore, it can negatively affect the profitability of existing businesses. The likelihood of new firms entering an industry depends on the extent to which barriers to entry have been built. In other words, existing companies in the industry establish multiple constraints to limit the number of potential competitors. In the automotive industry, the threat of new entrants is low, due to high barriers to entry. One of the biggest constraints is the need to invest large amounts of money. Initial capital is needed to hire and train employees, purchase facilities, raw materials. Since the automotive manufacturing industry is quite complex, it is necessary to invest in the latest innovations, research and development. Given the nature of the business, new entrants must be able to achieve economies of scale. These economies arise when companies focus on simplifying product lines in order to reduce unit cost over larger volumes. This could pose a critical obstacle, forcing the new automaker to accept a cost disadvantage. The newcomer must find suitable means of distribution. This can be difficult at times because existing companies may have close and exclusive relationships with distributors. In that case, the new company must build its own distribution channel. Another significant obstacle that potential competitors must endure is brand recognition. Gaining the trust and recognition of customers takes a long time. Furthermore, newcomers may have to invest a large amount of money in advertising, focus on producing the right quality products, and offer high customer service. In 1986, the globally recognized Korean car manufacturer Hyundai entered the US market. At that time the economic situation was favorable for starting a new business. However, Hyundai was not