Moat- All you need to know about it

Competitive Advantage that company needs

What is Moat?

Moat is a advantage a company

Has over its peers

Which makes it secure

And more profitable compared

To peers , is a Moat.

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Any example of moat in real life ?

Lets take a scenario where Mr.A and Mr.B.

Are applying for same job but 

A has one more additional degree than B.

Guess ? who will get a job ?

Yes Mr.A will get a job.

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Any relevance of moat?

Yes in a capital country like india.

Anyone who wishes to open a shop or business

Can do it easily which creates competition

Among players . Hence the one with advantage

Will only go ahead.

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How many types of moat are there?

1. Switching Cost

2. Owning a Patent

3. Brand Name

4. Network Effect

5. Govt Regulation

6. Taste

7. Distribution

Lets Go Down into them..

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Switching Cost

Lets say you have a bank account with Abc bank.

Now they decide to reduce FDs Returns.

Now will you replace the account?

No, why because your bank account is been link

With so many things and services.

This is switching cost moat’s example.

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Owning a Patent

This happens in Pharma companies that

They will invent a drug and patent it

So that for next 20-30 yrs they will only sell it.

So the revenue of that company will keep flourishing

till they have patent. This is Owning a propriteray

Asset moat. 

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Brand Name

Lets say you want to buy a Soap.

There are 2 options. One is of tata and other

Is of a new company.What will you choose?

Tata right cause Tata has built a brand name

Around it so that it has good reputation.

This is Brand Name Moat.

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Network Effect

Lets say i ask you why you use whatsapp?

You will say cause everyone is using it.

Is it the best among its peers?No. Then why?

Because of this network effect moat

Everybody uses whatsapp.

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Govt Regulation

Lets say you want to open a explosives company?

Will government allow you ?No. Why? 

Cause govt has allowed very few players in this 

Industry . Hence this moat is with companies

Which are protected by Govt regulations

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Taste

If given a choice which new noodles will you choose

Of maggie or yippe?Your answer will be maggie 

Right cause now your taste has been developed 

With maggie hence you will prefer it over yippe.

This is taste moat.

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Distribution Moat

If A company has good distribution network in whole 

India and now they decide to launch a new product.

Will A company able to make the product available in 

Whole india? Yes . Hence A company will prevail

Due to distribution moat

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