Entrepreneurship and Small Business (ESB) Certification Practice Exam

During a competitive analysis, which two actions should you take?

1. Identify competitors’ marketing channels, Research pricing strategies

2. Identify the competitors' market share, Research strengths and weaknesses

3. Analyze customer feedback, Review online presence

4. Study industry trends, Evaluate customer demographics

The correct answer is: Identify the competitors' market share, Research strengths and weaknesses

The correct choice, which emphasizes identifying the competitors' market share and researching their strengths and weaknesses, is fundamental in a competitive analysis for several reasons. Understanding a competitor's market share provides insights into their dominance in the marketplace and can help you gauge your own potential within that industry. Knowing how much of the market your competitors control can inform your business strategy, adjustments in your operations, and even your pricing structure. It allows you to benchmark your performance against established players and identify opportunities for growth or market entry. Researching the strengths and weaknesses of competitors reveals valuable information regarding what they do well and where they might be struggling. Such analysis enables a business to differentiate itself by capitalizing on competitors' weak points while mimicking successful strategies they employ. This comprehensive understanding can guide product development, customer service enhancements, and targeted marketing initiatives to ensure a strategic edge in the marketplace. Other choices, while containing valuable components of a competitive analysis, do not encompass the vital strategic metrics such as market share and the relative strengths and weaknesses of competitors, both of which are critical for informed decision-making and planning in an entrepreneurial context.