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1.
Being unable to enter a market because it would cost a huge amount of money just to break into it is an example of _______.
Threat of new entrants. In this case, the threat is low.
2.
In the language of economic moats, depth is different from width. What does depth refer to?
How big any particular competitive advantage is. Instead of the overall size of the competitive advantage(s), depth looks at the power of individual advantages.
3.
Regarding buying companies that have economic moats, which is probably the more profitable strategy?
Buying them, holding them for a long time, and then selling them. Given their advantages in their industries, you would likely come out ahead by holding them for a long time.
4.
Which of the five forces is most associated with the network effect?
Barriers to entry. The network effect, one of the main types of moats we have identified, is a strong barrier to entry. It also reduces the threat of substitutes and buyer power, since industries with companies experiencing the network effect will have few alternatives.
5.
A company that resides in an industry where wide moats are nearly impossible to create might still have a narrow moat. Such a moat would be of what variety?
Moat with structural challenges. Due to structural factors, becoming a wide moat is nearly impossible, but the company can still enjoy a narrow moat and still be in a dominant position.
