Chapter 4 - External Analysis

__________ competitive factor describes areas of a business that provide an opportunity for it to gain value over and above ordinary returns in the industry.

Unusual and unique

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

all four of the criteria (rare, durable, relatively nonsubstiutable, and valablue.)

Entrepreneurs should visit _________ when developing a competitive map.

all of the potential competitors

Entrepreneurs should be ________ in defining their customers.

as accurate as possible

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

associations

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

competitor

Elasticity of demand is the _________

consumer's response to price change.

Most small businesses that directly compete with well-established firms operate at a __________

cost disadvantage and must compete on some other basis.

products or services that are considered rare have qualities that competitors find _____

difficult to obtain

A(n) _____ ______ keeps an entrepreneur from leaving a busines 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

The primary purpose of the NAICS code is to help ___________

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

Entrepreneur must _________

understand why customers choose their business and focus on those advantages.

Conducting a resource-based analysis will help entrepreneurs _________

better understanding what creates the business's advantage.

Benchmarking is ___________

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

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

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

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

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

Which of the following are reasons why entrepreneurs should develop their own competitive map?

1) It is less expensive 2) It will help in developing insights regarding positioning, pricing, and even facility layout. 3) It provides the entrepreneur with an understanding of what is right and wrong with each competitor.

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

A detailed understanding of the external environment.

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

Boating Playing tennis Playing handball

__________ is the edge a business has over competing businesses.

Competition advantage

Which of the following provides the new business with the opportunity to make more money than the competition?

Competitive advantage

According to the book, a clear understanding of the business's customers is important because it _____ A) provides a way to control expenses. b)aids in keeping a strategic distance between itself and its competitors. c) helps in focusing on the core customers. d) all of these

D

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

Rare valuable durable

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

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

Which of the following are criteria that should be considered in developing a competitor map?

The facility's square footage The pricing of products The quality and availability of parking.

Which of the folllowing statements about unusual or unique competitive factors are correct?

These factors are central to developing a competitive advantage. Entrepreneurs need to focus their resources on these factors. These factors provide a means for the business to differentiate itself from competitors.

advantage, the potentially unusual products or services offered by the new business need to meet all of the following criteria:

They must be rare, durable, relatively nonsubstitutable

Which of the following areas provide a business with a competitive advantage?

Those that help the business create a lower cost structure. Those that draw new customers when the price is the same as competitors.

If the expenses incurred in operating a business are such that an entrepreneur cannot easily recoup the investment, then the level of competition will be more intense.

True

The North American Industry Classification System (NAICS) is a code generated by the US government to gather, track, and publish data on specific industries.

True

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

industry

Association exist to support and promote their _______

industry

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.

What provides a competitive advantage in one industry ________ and _______ with time.

is different from other industries; varies

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

knowledge

Understanding the business's competitive advantage is the ________- step in the external analysis

last

What starts out as a competitive advantage for one company may become a __________

standard practice within that industry.

A(n) _____ is a product that performs a similar function, or it achieves the same result.

substitute

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

valuable

A competitive advantage creates ___________

value

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

who are interested only in customers from their local area

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

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

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

competitors

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

Fragmented

Which of the following is an example of the list of items that an entrepreneur should include while visiting and making comparisons to his/her potential competitors? A) nearby attractions for customers B) size of the facility C) access from road D) all of these

D

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?

Developing an understanding of the competitive advantage

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

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

In the context of external analysis of competitors, if new business owners are very clear regarding their customers' needs, then the ability to identify direct competitors becomes significantly challenging.

False

Exact competitors are _________

businesses that directly compete for the same ideal customers.

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

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

decreased and the threat posed by a new entrants is reduced.

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

help the business earn more profits than competitors.

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

long

While defining a radius from which one believes to draw a majority of one's customers, one should ________

make this distance reasonable

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

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

______ products perform a simliar function or achieve the same results, but are not a precise imtitaion .

substitute

Entrepreneur should understand ___________

that the geographic radius that customers will travel is not the same for all businesses

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

trends