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Competitive Advantage in a Down Economy

Written by: Ilya Bodner

Article Overview: Your small business is bound to yield fruit when you keep long-term goals in mind during daily operations. Constant examination of each department that has an integral role in the effectiveness of the business should be monitored for its contribution to the "bottom line."

Competitive Advantage in a Down Economy

Your small business is bound to yield fruit when you keep long-term goals in mind during daily operations. Constant examination of each department that has an integral role in the effectiveness of the business should be monitored for its contribution to the "bottom line." 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.

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Article Tags: annual report, assets, barriers to entry, berkshire hathaway, bottom line, brand name, brand names, castles, competitive advantage, integral role, invention service, nbsp, opponents, patent, profit margins, rewards, rivals, small business, term goals, warren buffett



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