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1.
When a company tries to differentiate its product from those of its competition by spending money on marketing, it is attempting to create what type of moat?
Intangible assets. Marketing is generally done to build brands, and brands are intangible assets.
2.
How can a low-cost producer achieve a barrier to entry?
All of the above. These are all ways that a low-cost producer can achieve barriers to entry.
3.
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.
4.
A company can achieve the 'network effect' simply by more people using its product or service.
True. As more people use it, its value to the marketplace grows.
5.
Which type of moat benefits from making life difficult for its customers?
Switching costs. High switching costs compel customers to stick with a company, because there is a cost to the customers to choose another alternative. Economies of scale make life better for customers because they allow firms to price their products lower.
6.
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.
