Although research on competition-based entry barriers has been popular, we still need to understand perceptions of barriers, effects on market strategy and accompanying knowledge processes. This paper suggests a model for knowledge of barriers and effects on entrant firm strategy. The model and its propositions rely on the contingency perspective, and company cases illustrate the model. It is proposed that exogenous and endogenous barriers are mutually reinforcing, and that an entrant firm perceiving extensive barriers would choose a broad product/market scope and differentiate its products to a large extent. Finally, it is proposed that incumbents’ strategies indirectly affect the strategy of an entrant firm and interact with barriers. Literature contributions and suggestions for empirical research are discussed.