Chapter 4

nonsubstitutable

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

rare

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

a lack of focus

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

competitive advantage

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

advantage

A competitive _______ is the edge a business has over competing businesses

durable

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

inelastic

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

the entrepreneur

A reasonable distance is determined by

industry

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.

competitor

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

an opportunity

An entrepreneur should start a business based on

trends

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

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

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

associations

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

Exit barrier

Investments in businesses that are not easily recovered are considered

important

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

knowledge

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

North American Industry Classification System

NAICS

difficult to obtain

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

long

Trends shape the ______-term prospects of the given industry

last

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

a detailed understanding of the external environment

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

decrease and the threat posed by new entrants is reduced

When entrepreneurs can easily exit an industry, the intensity of industry competition tends to

competitive advantage

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

A personal frustration A new technological advancement A vacancy at the perfect location for a business

Which of the following are examples of sources where an opportunity may come from?

Playing tennis Playing basketball Playing handball

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

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

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

Help the business earn more profits than competitors

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

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

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

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

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

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

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

Most entrepreneurial businesses compete in a fragmented market

Which statement about fragmented markets is true?

Customers share similar buying criteria, such as price It is defined as businesses within a specified geographic radius Businesses in the same industry sell similar products

Which statements about an industry are true?

Resource-based

______ 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

Fragmented

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

substitute

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

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

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

industry

Associations exist to support and promote their

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

Benchmarking is

consumer's response to price changes

Elasticity of demand is the

understand why customers choose their business and focus on those advantages

Entrepreneurs must

be as specific as possible

Entrepreneurs should ______ when defining their business's industry

as accurate as possible

Entrepreneurs should be ______ in defining their customers

include customer groups not likely to shop at their business

Entrepreneurs should be careful to not be so broad that they

competitors

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

businesses that directly compete for the same ideal customers

Exact competitors are

Journals The internet Magazines

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

Durable Rare Valuable

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

first

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

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

The primary purpose of the NAICS code is to help

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

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