Alligator Enterprises has earned above-average returns since its founding five years ago. Since no other firm has challenged Alligator in its particular market niche,the firm's owners can feel secure that Alligator has established a competitive advantage.

Question

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The fact that no other firm has challenged Alligator in its particular market niche does not necessarily mean that the firm has established a competitive advantage. Other factors such as barriers to entry, patented technology, or economies of scale may also play a role in determining a firm's sustained profitability. Therefore, it is not safe to assume that above-average returns for the last five years will continue indefinitely without further analysis.

Alligator Enterprises Has Earned Above-Average Returns Since Its Founding Five