"Products and services that have wide, sustainable moats around them are the ones that deliver rewards to investors!"

Warren Buffet, Fortune 1999


A major component in company valuation is the degree to which the company has established a Sustainable Competitive Advantage. This is a subjective measure supported by quantitative evidence such as sales growth and market share, track record of technology innovation and the ability to respond to changing market conditions.

 

Another measure of Sustainable Competitive Advantage is the unique position that you have in the marketplace among partners, competitors and customers that is not easily replicated by your competition. Traditional internal strengths might include patents, leadership team, team work and know-how to be successful in the marketplace.

 

External strengths would consist of the combined goodwill of partners, customers and respect of competitors.

 

Partners
Where a company is sought after by potential partners the company is able to pick and choose the most strategic relationships to enter new markets and offer new products and services.

 

Competitors
Fear by competitors is a significant determinant of competitive advantage. The competitor is rating your ability to win business, offer products and services beyond theirs and establish the recognition of your company in the marketplace by customers who are highly regarded.

 

Customers
Customers that rate their suppliers as strategic are in an enviable position in that they are in the driver seat when major decisions are made, requirements specified and calculating product benefit. Product value has been defined by the customer as being more than just the purchase price.

 

Sustainable Competitive Advantage
The intersection of these three perspectives expresses the potential success of your business model in the future that is not easily lost due to the efforts of others.