CB Insights’ report discusses the concept of ‘business moats’, strategic advantages that protect a company from competitors. Five types of moats are identified: network effects, intellectual property, cost advantages, efficient scale and branding. Network effects increase a product’s value as more people use it, providing a significant competitive edge. Intellectual property, including patents and trade secrets, can deter copycats and promote innovation. Cost advantages, such as access to cheap resources or superior technology, can enable a firm to undercut rivals. Efficient scale refers to industries where a limited number of companies can profitably exist, effectively shutting out new entrants. Lastly, a strong brand can command customer loyalty and premium pricing. The report emphasises the importance of these moats in fostering long-term business success. It also warns that moats can erode over time and must be continuously reinforced.
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