Competitive Advantage in a Down Economy

COMPETITIVE ADVANTAGE

Developing a strategic asset, similar to a trademark or brand name, creates a competitive advantage over other companies, which raises barriers to entry in your marketplace. If there were no barriers, competitors could walk in and take over. No one would have a competitive advantage over another. All would be equal, with regular, dull profit margins.

"In business, I look for economic castles protected by unbreachable ‘moats.'"

-Warren Buffett, Berkshire Hathaway Annual Report (1995)

In order to achieve and maintain a competitive advantage over your rivals for any invention, service or product, it is wise to develop some line of defense. Just as in sports, a team must have a defensive plan against the competition. If it is a strong line of defense, your opponents will eventually give up. The more competitive the market is, the more barriers are recommended to maintain a competitive advantage. It is worth the effort, as rewards are high.

With a trademark in effect, as a strategic asset, that product becomes recognized over others in the industry, and will hold against strong competition, sustaining prices and profit margins. Another strategic asset is establishing a brand name. This deters competitive companies in the beginning stages. Brand names take more time to establish.

A company definitely would command a stronger presence with more barriers, such as a patent or copyright, and would lead the pricing in their industry. The more strategic assets a company attains, the more successful that company will be.