It’s the intangible elements of your approach that differentiate your brand – things like your culture, processes, customer service, meeting rhythms , leadership structure, values, mission, vision, A players , and strategy. The cost of production is well optimized for the company to have a disruptive price for the competition. Their capital costs are lower than pure-private airlines due to government subsidies (over $42 billion since 2004) and their geographic location provides an excellent cost advantage for en-masse hub-and-spoke long-haul. Some of the reasons a company might have an economic moat are more difficult to identify. It also corresponds with the sustaining innovation trap of incumbents eventually being usurped by disruptive innovators. There are many types of MOAT available. But when you read the proceeding section on intangible assets, you will see how moats can be powerfully built inside healthcare. In the dictionary, a moat means a deep and broad dug that surrounds and protects a castle. The latest resources and announcements Moat Outcomes Gives Advertisers Fast and Actionable Measurement of Real-World Business Results A business moat, therefore, is something that helps keep your customers away from your competitors. This time, your competitors will have no way of duplicating your methods, as your competitive advantage is protected by your patent. I mentor Indian retail investors to invest in the right stock at the right price and for the right time. When you ask most CEOs about their vision for their business, they usually give you an answer built around metrics like number of customers, market share, or profitability. Learn more! Full Disclaimer | Privacy Policy, Time Correction Vs. Price Correction – With Examples, Intrinsic Value of Stock – Warren Buffett’s Formula, What is MOAT – Invest in Companies With Economic MOAT, Ascending Triangle Chart Pattern With Examples, DVR Shares Or Differential Voting Rights Shares, Descending Triangle Chart Pattern With Examples, Higher Top Higher Bottom Chart Pattern With Examples, Lower Top Lower Bottom Chart Pattern With Examples, MOAT – Invest in Companies With Economic MOAT, Top Down Approach and Bottom Up Approach to Investing. Economic moats are advantages that defend businesses from ceding market share and profits to the competition. At times they seem like a means to an end. Below, we will explore some different ways in which moats are created. Intellectual property is a set of intangibles owned and legally protected by a company from outside use or implementation without consent. Essentially, the wider the economic moat, the larger and more sustainable the competitive advantage of a firm.