83) Keith has set up a new burger joint in his locality. He is planning on introducing craft beers and
milkshakes to the existing menu. Thus, the customers who visit his joint will have a range of
options to choose from. This scenario exemplifies ________.
A) identifying substitutes
B) understanding elasticity of demand
C) benchmarking
D) analyzing industry trends
84) Initech is a computer manufacturing company. Janice, a senior manager at Initech, is given the
task of developing the company’s after-sales services. Janice researches information about
companies that have been pioneers in this domain. She learns that Massive Dynamic, a car
manufacturing company, has the best after-sales service in the country. She gets in touch with
senior managers in Massive Dynamic and learns about their in-house operational processes that
enable them to be leaders in the industry. She introduces new policies in her company with the
knowledge gained from Massive Dynamic to improve their after-sales service. This scenario
exemplifies ________.
A) convergence
B) benchmarking
C) elasticity of demand
D) bootstrap marketing
85) Harold is the owner of a beer cafe in his locality. His beer cafe is not the only one in the area. In
order to improve business, Harold decides to make a few changes to his cafe. He installs
state-of-the-art music system, a karaoke machine, and a snooker table in his cafe. Customers flock
to his cafe every evening because it is the only cafe in the locality with these facilities. Which of
the critical steps involved in conducting an external analysis has helped Harold improve his
business?
A) Defining the customers
B) Examining and developing insights about elasticity of demand
C) Developing an understanding of the competitive advantage
D) Drawing a set of competitive maps
86) Which of the following should be an entrepreneur’s last step in external analysis?
A) Identifying competitors within the industry
B) Understanding the competitive advantage
C) Defining the customers
D) Developing competitive maps
87) In the context of external analysis, once an entrepreneur has examined and developed insights
about substitutes, elasticity of demand, ease of entry and exit, benchmarking, and industry trends,
he or she should ________.
A) identify competitors within the defined industry
B) define the industry in which he or she is competing
C) develop an understanding of his or her competitive advantage
D) draw a set of competitive maps
88) The term ________ is defined as a theoretical approach and practical methodology that
examines the functioning of a business in terms of whether a product or service simultaneously
meets the criteria of being rare, durable, nonsubstitutable, and valuable.
A) “competitive map”
B) “deficit analysis”
C) “benchmarking”
D) “resource-based analysis”
89) ________ is the edge a business has over competing businesses.
A) Competitive advantage
B) Benchmarking
C) Criteria-related advantage
D) Competitive map
90) A competitive advantage in a business could be ________.
A) location
B) product selection
C) activity of the firm
D) all of these
91) ________ is an area of business that uses standards that are necessary for the business.
A) Competitive map
B) Benchmarking
C) Unusual or unique competitive factor
D) Normal or ordinary competitive factor
92) ________ describes those areas of a business that are unique or unusual as compared to
standard practices of the industry.
A) Competitive map
B) Benchmarking
C) Unusual or unique competitive factor
D) Normal or ordinary competitive factors
93) A business owner will gain an increased understanding of the unusual or unique competitive
factors and capabilities of a business through
A) gap analysis.
B) competitive map.
C) resource-based analysis.
D) benchmarking.
94) All of these are criteria to be an unusual or unique service/product EXCEPT ________.
A) valuable
B) consistent
C) durable
D) rare
95) Which of the following provides the new business with the opportunity to make more money
than the competition?
A) External analysis
B) Market trends
C) Competitive advantage
D) Industry trends
96) A(n) ________ consists of direct competitors selling similar products or services within a
specified geographic radius.
97) In ________ markets, no one competitor has a substantial share of the market and the means of
competition vary widely within the same market space.
98) A(n) ________ is an analytical tool used to provide information to organize information about
direct competitors on all points of competition.
99) As the prices of luxury items increase, the demand usually declines as these goods are not
essential and their purchase can be delayed. This would be called_____.
100) ________ markets are areas in which no one competitor has a substantial share of the market.
101) A(n) ________ is a product that performs a similar function, or it achieves the same result.
102) ________ is studying and learning from a company outside of your industry that has a
particular skill that is potentially critical to the company’s operation.
103) Competitive ________ is the edge that a firm has over competing businesses.
104) Describe the critical steps in examining the external environment of a new business.
105) Dennis wants to open up a bowling alley in his community. What types of questions would be
used in the research of the industry?
106) What are fragmented markets and how do they affect a small business owner?
107) What are the reasons for developing a competitive map?
108) When an owner visits a competitor to gather information, what information should be
reviewed?
109) Describe and give examples of economic issues that founders of a new business will want to
consider in their external analysis.
110) Why does a new business need to develop a competitive advantage?
111) Describe the four criteria that unorthodox products or services develop into a competitive
advantage.