ENTR Chapter 4

A competitive advantage can come from which of the following examples?

Access to distribution channels that competitors cannot gain access to A product that is protected by a patent A location that is highly sought after by other businesses

Which of the following are potential sources of a business's competitive advantage?

An activity that the business does best A unique structural business attribute

Investments in businesses that are not easily recovered are considered _____.

An exit barrier

Industry _____ exist for nearly any industry and often exist at the state, national, and even international levels.

Associations

Which of the following is the first step in understanding the nature of the external environment?

Define the business's industry.

A(n) _____ map is an analytical tool that organizes information about direct competitors on all points of competition.

Competitive

A company's ______ ______ is made up of those things that the company does uniquely well or better than anyone in the same industry.

Competitive advantage

An effective industry analysis starts by identifying every potential ______ within a defined distance of the new business's location.

Competitor

Entrepreneurs should define the industry broadly enough to be inclusive of all potential ______.

Competitors

A(n) ______ is defined as those direct competitors that sell similar products or services within a specified geographic radius that customers are willing to travel.

Industry

Which of the following statements are true about a business's competitive map?

It is part of the business's external analysis. Its purpose is to better understand competitors and their capabilities.

Which of the following are reasons why an entrepreneur should develop his or her own competitive map?

It will help in developing insights regarding positioning, pricing, and even facility layout. It provides the entrepreneur with an understanding of what is right and wrong with each competitor. It is less expensive.

Many companies that are not potential competitors are willing to help industry outsiders improve their operations by sharing their ______.

Knowledge

Understanding the business's competitive advantage is the ______ step in an external analysis.

Last

Trends shape the ______-term prospects of the given industry.

Long

Which statement about fragmented markets is true?

Most entrepreneurial businesses compete in a fragmented market.

Which of the following is NAICS an acronym of?

North American Industry Classification System

Which of the following statements regarding developing competitive maps are true?

One must take a customer perspective from a series of visits. Entrepreneurs should visit all potential competitors. Entrepreneurs must develop a list of criteria that they wish to take away from their visits to competitors.

Which of the following are examples of substitutes for playing soccer?

Playing tennis Playing basketball Playing handball - Going to the movies

The entrepreneur's local area may be doing well, while other areas around the country are doing ______.

Poorly

A ______ product or service describes a quality that competitors will find difficult to obtain.

Rare

Resource-based analysis examines which of the following criteria that products or services must meet?

Rare, Valuable, Durable

A common cause of new business failure is ______ on its competitive advantage.

a lack of focus

Entrepreneurs should ______ when defining their business's industry.

be as specific as possible

Conducting a resource-based analysis will help entrepreneurs ______.

better understand what creates the business's advantage

Exact competitors are ______.

businesses that directly compete for the same ideal customers

Conducting a ______ analysis will help entrepreneurs better understand what creates the business' advantage.

resource-based

A reasonable distance is determined by ______.

the entrepreneur

The primary purpose of the NAICS code is to help ______.

the government gather, track, and publish data on specific industries

An important part of a competitor's analysis is gaining an understanding of the industry's _____.

trends

Entrepreneurs must ______.

understand why customers choose their business and focus on those advantages

Data that are aggregated on a national level may have limited value to entrepreneurs ______.

who are interested only in customers from their local area

Benchmarking is ______.

working with and learning from a company outside one's industry that has a particular skill that is potentially critical

Which of the following statements regarding a business's competitive advantage are true?

A competitive advantage must provide the opportunity to be more profitable than competitors. New businesses rarely perform better than competitors in all areas. New businesses need to develop one or several fundamental characteristics with which it exceeds the industry's performance.

What is the key to effective opportunity recognition by an entrepreneur?

A detailed understanding of the external environment

A product or service that is ______ provides the company with the ability to hold onto the competitive advantage.

Durable

A(n) ______ _____ keeps an entrepreneur from leaving a business he or she invested in.

Exit barrier

The ______ step of conducting an external analysis is determining the industry in which the new business will compete.

First

______ markets are those markets that have no clear dominant competitor and are made up of a large number of similar-sized companies.

Fragmented

Which of the following must a competitive advantage do in order to be valuable to the business?

Help the business earn more profits than competitors

Which of the following statements regarding exact or direct competitors are correct?

Identifying direct competitors is easier when entrepreneurs are clear regarding their customers' needs. Often, direct competitors are geographically local. Direct competitors can be found via Google Maps (or equivalent).

Knowing one's customer is ______ for the effective use of marketing dollars.

Important

Identify the critical steps in examining the nature of the external environment of a business.

Research the industry in which one expects to do business. Research the competitors within the industry that one expects to do business. Draw a set of competitive maps.

______ analysis is a theoretical approach and practical methodology that examines business functions in terms of whether a product or service meets the criteria of being rare, durable, nonsubstitutable, and valuable simultaneously.

Resource-based

______ products perform a similar function or achieve the same result, but are not a precise imitation.

Substitute

Reliable industry-specific information can be found in which of the following sources?

The Internet, Magazines, Journals

Which of the following are the three elements that describe how durability helps businesses hold onto the competitive advantage?

The length of time that a business might be able to gain and hold a competitive advantage The desire of competitors to compete with the business using the same potential resource or capability How long it would take for a competitor to imitate the product/service or to wash away the business's advantage

Which of the following statements are true about the normal or ordinary parts of a business?

They must be done and done well. There is little reason to do any of the normal or ordinary parts of a business better than the average in the industry.

Identify the true statements about unusual or unique parts of a business.

They provide a means for the business to differentiate itself from its competitors. They are central to the competitive advantage.

"______" refers to the ability to gain extraordinary returns for the business's product or service.

Valuable

Products that are not _____ will not provide the business with returns in excess of what competitors earn from their sale.

Valuable

The product or service must meet ______ in order to develop into a competitive advantage.

all four of the criteria (rare, durable, relatively nonsubstitutable, and valuable)

Entrepreneurs should visit ______ when developing a competitive map.

all of the potential competitors

An entrepreneur should start a business based on _____.

an opportunity

Determining a reasonable distance that customers will be willing to travel is more of a(n) ______ than a(n) ______.

art; science

Entrepreneurs should be ______ in defining their customers.

as accurate as possible

When products or services are rare, durable, relatively nonsubstitutable, and valuable, they can develop a ______.

competitive advantage

Elasticity of demand is the ______.

consumer's response to price changes

Products or services that are considered rare have qualities that competitors find _____.

difficult to obtain

Entrepreneurs should be careful to not be so broad that they ______.

include customer groups not likely to shop at their business

A product that customers are willing to pay virtually any price for has a very ______ demand.

inelastic

A competitive map _____.

is an analytical tool that helps entrepreneurs compare competitors based on a set of criteria

"Relatively _____" is a determination about whether a service or a product may be easily substituted by something else that a competitor could provide.

nonsubstitutable

Products or services that are relatively ______ are those that competitors cannot easily substitute.

nonsubstitutable

Entrepreneurs can create a list of competitors that customers can find ______ when there is no physical restriction to the business's operation.

on the Internet electronically