Analysis Intermediate: Start Thinking Like an Analyst

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1.
Which of these is not a type of economic moat?
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Technological expertise. Technological expertise can form the foundation for an economic moat, but it is rare that the expertise provides a sustainable, long-term competitive advantage, because improvements in technology are often easily imitated.
2.
Of the following four questions about business analysis, which one would you most likely need outside help answering?
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How well is the business positioned relative to its competitors? For this one, you would need to get information about several other businesses to help you answer it.
3.
What is an economic moat?
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A long-term competitive advantage that allows a company to earn oversized profits over time. A moat protects the business and does not let other businesses in.
4.
Why might a restaurant company be unlikely to ever have anything more than a narrow moat?
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Because consumer switching costs are so low. Many restaurants are quite profitable, and not all of them spend money on branding. Still, there is a lot of competition in the industry, and it's very easy to walk across the street to a rival restaurant, so the switching costs are very low.
5.
High switching costs help companies _______.
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Raise prices without the risk of losing customers.