Exam 4: External Analysis

To have a competitive advantage, the unusual products or services of a business need to meet these four criteria: rare, durable, valuable, and nonsubstitutable.

A substitute exists if the service or product performs a similar function.

A tool to better understand competitors and their capabilities is

_____ is working with and learning from a company outside of your industry that has a skill that is critical to the firm's operation.

A small business can compete on a cost basis with a larger firm.

A competitive map is an analytical tool to organize information about direct competitors.

A substitute can assist in forming a(n)________ on the price that can be charged for product or service.

In determining the industry within which a new business will compete, an entrepreneur should seek to be as generalist in his or her approach as possible.

Basic industry information can be obtained only by participating in focus groups.

New business owners do not need to identify customers because they have already been identified by their competitors.All you have to do is copy your competitors.

Elasticity of demand is the ease that exists when a customer can switch to a substitute.

A competitive map does not require a visit to all potential customers.

A trade-in is a product that performs a similar function or achieves the same result as the original product.

Competitive ________ is the edge that a firm has over competing businesses.

In developing a competitive map, an owner should review

Why does a new business need to develop a competitive advantage?

A(n)________ is defined as those companies within a specified geographic radius that will be in direct competition for the same customers and sales as that of the new business.

Harold is the owner of a beer cafe in his locality.His beer cafe is not the only one in the area.In order to improve business, Harold decides to make a few changes to his cafe.He installs state-of-the-art music system, a karaoke machine, and a snooker table in his cafe.Customers flock to his cafe every evening because it is the only cafe in the locality with these facilities.Which of the critical steps involved in conducting an external analysis has helped Harold improve his business?

________ keeps an entrepreneur from leaving the business.

According to the book, which of the following is an example of an economic issue that a new business should consider?