Ah! Darden Fire Proof Inc. This is a good one :)

You are asking a fantastic question and the answer is it depends. Please don't let anyone oversimplify this and insist one is inherently better than the other.

Neither a fragmented nor a concentrated market is necessarily good nor bad to enter.

Fragmented

Pros:

• Easy to enter (presumably)
• No one player can dominate you or force you out (Amazon/Facebook/Amazon for example)
• No one player has unfair advantage in the form of buyer/supplier power
• You can product differentiate to win
• You can possibly merge/acquire/grow to gain market share and eventually dominate

Cons:

• Likely highly competitive
• New (and possibly better) entrants may come in all the time
• Margins will likely be tight
• Price competition likely
• You are not a market maker (i.e. you are bound by the laws of supply meeting demand)

Concentrated Market

​Pros:

• Once you're in, risk of new entrants/competition is low (high barriers to entry)
• Once you win, you have monopoly power (high margins, market control, etc.)
• The existing player(s) is/are likely very weak (high marginal cost structure, inefficiencies, slow to move)

Cons:

• Will be extremely hard to enter
• Will be extremely costly to enter
• Once you're in, you will likely get bullied by the existing power
• The existing power will have more buyer/seller power and a natural advantage over you

What information do I need to decide whether to enter? Well, not to be cheap/use a generic framework, but I need to know the three Cs (Company, Customer, Competition).

Fundamentally, if I enter, will I win?

• Company - Who am I
• Customer - Do I offer something people want
• Competition - Can I do this better than everyone else?

Some more info here as well: https://www.preplounge.com/en/consulting-forum/market-attractiveness-barriers-8768

(editiert)

Hello!

+1 to Ian, very much agree with the fact that fragmented vs. not does not have to be very good or very bad, it depends, and it´s only one factor to take int consideration.

Furthermore, why are you focusing particularly on this KPI? In the slide I see many that I would like into before.

Hope it helps!

Cheers,

Clara