Suppose you ran the only bakery in town that was currently very profitable. What things might you consider if you wanted to ensure that you continued to enjoy the same success in the future? What might you do to head off competition?
With a company like a bakery the only way to stave off competition is by creating barriers to entry. Due to the nature of the bakery industry (many suppliers competing against each other, many customers available, etc.) their are only two ways to stave off competition; either by producing a product that’s so good no one would bother trying to compete (although firms will emerge that will compete with you on price) or by getting the local government to enact favorable zoning regulations.