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Wide Economic Moat

Started by munna99185, July 18, 2014, 01:05:06 PM

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munna99185

July 18, 2014, 01:05:06 PM
A type of sustainable competitive advantage that a business possesses that makes it difficult for rivals to wear down its market share and profit. The term is derived from the water filled moats that surrounded medieval castles. The wider the moat, the more difficult it would be for an invader to reach the castle. Businesses that possess at least one factor of Porter's 5 forces model would possess a wide economic moat. For example, a business that holds an exclusive patent for the creation of a miracle drug would effectively keep potential competitors out of its business. Having few or no competitors would allow the company to continually generate high levels of profit. Legendary investor Warren Buffett is renowned for his philosophy of investing in businesses with wide economic moat.
[Source: http://www.investopedia.com/terms/w/wide-economic-moat.asp]



Sayed Farrukh Ahmed
Assistant Professor
Faculty of Business & Economics
Daffodil International University


Sayed Farrukh Ahmed
Assistant Professor
Faculty of Business & Economics
Daffodil International University


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