Competitive Advantage

A durable structural edge that allows a business to fend off competitors and compound returns over time. A core investment diligence criterion: what is the “special sauce” or moat that lets this business sustain its market position as competitors try to imitate it?

Ram Bhupatiraju’s investment checklist lists Competitive Advantage as one of eight diligence categories — alongside Value Proposition & Customer, Industry, Strategy, Performance, Financial Position, Management & Governance, and Valuation. The checklist treats competitive advantages as the key filter that “help in separating the Quality/durable companies from the weaker ones.” Source: Phenomenal Investment Checklist and Blog… (tweet).

The canonical book treatments are Competitive Advantage (Porter) (Michael E. Porter, 1985) and Competition Demystified (Greenwald & Kahn, 2005), both on Li Lu’s and Gavin Baker’s recommended reading lists.

Where this appears

• Phenomenal Investment Checklist and Blog… (tweet)