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Creating Economic Moat
The economic moat is created by blocking out competitors from entering the market and cutting off their supply chain.
Companies like IBM and Coca-Cola successfully maintained their economic moats by utilizing a variety of strategies such as Coca-Cola patenting its secret recipe.
Businesses that establish an economic moat for themselves have a competitive advantage over their peers.
They are able to charge a price premium for their products or services and maintain profitability without much competition.
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Economic Moat
An economic moat refers to a sustainable and enduring competitive advantage that companies can use to maintain profitability over the long term.
An example of an economic moat would be a brand name, intellectual property like a patent, or control over distribution channels....
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3 Key Elements of the Economic Moat
1) Cost advantage - In this case, it is a cheaper cost per unit to produce or buy than its competitors.
2) Barrier to entry - It can be as simple as large fixed costs, limited availability of resources, or high capital costs.
3) Network effect...
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Competitive Advantage
A company with an economic moat is less likely to be disrupted by a competitor.
This is because while there are multiple companies competing, the company with an economic moat can take advantage of its lead in the market and maintain it.
Economic Moats create barriers...
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5 Ways A Company Can Build An Economic Moat
- Create and deliver high-quality products or services that customers are willing to pay.
- Enhancing customer experience
- Build a proprietary technology
- Invest in intellectual property
- Find profitable niches
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Finding a Market
It is difficult to target the richest market for your product or service because of the sheer number of competitors.
The key to finding a low-competitor market is understanding what the customers are actually looking for and understanding their decision-making process.
In order to fin...
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Any company with a competitive advantage can be considered to have an economic moat.
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