CFA Level I · CFA Level I Exam · Company Analysis: Past, Present, and Future
An analyst evaluating a company's competitive position notes it has strong brand recognition and a low-cost production process that rivals struggle to copy. These features are best described as:
These features are best described as sources of a sustainable competitive advantage. A strong brand and a low-cost process that rivals cannot easily copy help the firm defend margins and returns over time, which is the opposite of a commodity market with low entry barriers.
- Asources of a sustainable competitive advantageCorrect
- Bevidence of a commodity-like product market
- Cindicators of low barriers to entry in the industry
Explanation
Brand strength and a hard-to-copy cost advantage support durable above-average returns, which is a sustainable competitive advantage. They point away from commodity markets and low entry barriers.
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