Analysis Intermediate: Start Thinking Like an Analyst

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1.
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.
2.
High switching costs help companies _______.
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Raise prices without the risk of losing customers.
3.
Which of the following questions will not likely help you analyze a business?
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None of the above. All of the above are good questions to ask in business analysis. There are hundreds more, of course. But these are a good start.
4.
Why are economic moats advantageous?
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They allow a company to generate profits and keep competitors at bay. Companies that reward investors over the long haul are those that have a durable competitive advantage.
5.
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.