What is a new entrant's advantage?

• A. A superior business model that incumbents don't copy due to potential collateral damage to their existing business or underestimation.
• B. Early access to capital markets.
• C. An entrenched customer base.
• D. Superior marketing spend.

Answer: (A)

A new entrant gains an edge when it brings a business model that incumbents can’t safely copy because it would undercut their existing profitable activities or because they underestimate its potential. This kind of model creates new value in a way that doesn’t align with the incumbents’ current structure, making imitation costly or risky. It’s not just about having more capital, a bigger customer base, or heavier marketing spend; those are advantages that incumbents can also leverage, and they don’t inherently explain why a newcomer would win. The unique, sustainable edge comes from the novel way value is created and captured—the model itself—rather than from chasing resources or superficial spending.