PLEASE ANSWER QUICKLY AS POSSIBLE

It was a dark and stormy night. Tom Bellerby, president of Bellerby Foghorns Inc., was having a restless night. Toms firm had been quite successful in the foghorn business, particularly in Kentuckys Ohio River Valley where the locals report that the fog sometimes gets so thick that drivers have to get out of their cars to see where they are going. Drivers found Bellerbys designs to be the most advanced because of their multiple pitches and because their technology enabled them to make their horns wail more frenetically as an approaching car would near an immovable object. However, recently, several firms had indicated that they might enter the automobile foghorn industry. Tom was trying to evaluate how real a threat this new entry might be.

Tom knew that his foghorns were widely acknowledged as unique in the automobile foghorn market. Their performance was unmatched, and many customers were willing to pay a few extra dollars just to have a Bellerby foghorn.

Tom also knew that to minimize manufacturing costs, plants needed to manufacture no more or no less than 350,000 fog horns a year. Currently, Bellerby had three such plants all operating at capacity. Bellerbys only two competitors each had one optimally sized plant apiece. Recent estimates suggested that total demand for automobile foghorns was likely to remain stable at 2,000,000 per year, and that no radically new manufacturing technologies were available.

What, if anything, should he do to deter entry?

		He should not do anything.
		There is nothing that he can do.
		He should keep an eye on industry capacity and be ready to act.
		He should advertise emphasizing the benefits of foghorns
		He should form a partnership with a potential entrant