What are the Competitive Advantages and points of differentiation over the Competitors while analyzing a company?
While analyzing a company, it turns out to be vital for analysts to find points of discrimination for the business from others within the industry/sector. As a sector/industry goes through high and low, so do the players in that sector/industry, on the other hand, each company will have its exclusive ways of mitigating risks and maximizing returns. These unique differentiating points are what an analyst should look for.
Presence of great brands, existence over long periods of time, history of clean and ethical management, aggressive takeovers and buyouts, monopoly/ large market share, great execution capabilities, great distribution network, great customer loyalty etc. are some of the qualitative aspects which differentiate companies from one another. Here are some examples on the subject.
Companies in the FMCG have to frequently generate brands in a range of class and certify that these brands are looked after because ‘products sell but brands profit’.
Long track record:
When IPOs are touching every few years, companies like SBI, which are 200 years old or GE in the international markets give self-assurance to investors as these companies have seen many business cycles and are therefore more information and understanding within to meet new test.
Clean and Ethical Management:
Big groups are living evidence to the significance of moral performance. Brands have reinforced due to this single factor – Principles, in totalling to many more competencies.
In their proposal to enlarge, some companies believe in insistent inorganic expansion – meaning takeovers.
Monopoly/ Large market share:
This depicts a role of being there of strong brands or products becoming brands themselves. Fevicol, LIC, Bisleri have all fruitfully imprinted a place for themselves and now almost single-handedly control the market and correspond to the industry.