1, cost advantage. It is more common in energy industry, industrial enterprises and retail industry. The main forms are: the company has high-quality assets; The company has a unique production process or marketing model; The company has economies of scale or scope; The company has exclusive raw material suppliers or distributors; The company has geographical advantages in production and sales.
2. Intangible assets. More common in consumer goods industry, pharmaceutical enterprises, public utilities industry. The main forms are: patent right; Brand advantage; Franchise license.
3. Switching costs. More common in science and technology industry, financial enterprises, equipment industry. The main influencing factors are: the income and cost of transformation; Customer's sensitivity to product price.
4. Network effect. More common in the Internet industry and express delivery industry. Main considerations: the value enhancement of products/services brought by network expansion; The unit cost decline caused by network expansion; Bargaining power of suppliers and buyers.
5. Effective scale (natural oligarchy). More common in public utilities. The main considerations are: the boundary of the market; The level of entry threshold; The minimum market share needed to keep the balance of payments. Companies with a certain economic moat can better resist the competitive behavior in the industry, thus ensuring the company to maintain a stable market share and obtain a long-term investment return higher than the industry average.
The above is about what Buffett moat is like, and I hope it will help everyone.