Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
Making it prohibitively expensive for customers to leave your company for your competitors is a way to build a sustainable competitive advantage in your industry.
True. By creating high switching costs, you can keep your advantage.
2.
Which of the following would not be an intangible asset?
The headquarters building. A headquarters building is tangible, not intangible.
3.
An example of the network effect is when _______.
A company starts making parts for another company. This kind of complementarity increases the value of the latter company.
4.
In the language of companies, what are switching costs?
Expenses incurred to switch over from one product to another. From the company's point of view, these can be a very positive thing.
5.
If a company is able to price its products lower than its competition and still make a profit while its competition is in the red, it has what type of moat?
Low-cost producer. Being a low-cost producer allows companies to price their products at lower levels than the competition, attracting buyers. Likewise, companies with low costs can price their products at the same level as competitors and make a higher profit.
6.
An efficient scale occurs in a limited market being efficiently served by _______.
One or very few companies. The "efficient" part of it means that very few players are needed to keep the market running well.
