Success Depends on Execution The #1 Variable that Wall Street Overlooks

4 Categories of Sustainable Competitive Advantage

True sources of sustainable competitive advantage fall into four categories [according to The Little Book That Builds Wealth]: 1) Intangible assets, such as brands, patents or regulatory licenses; 2) High customer switching costs; 3) Network economics, in which the value of the product or service increases with the number of users; and 4) Cost advantages, stemming from scale, location or unique processes. Such attributes can provide the competitive barriers to entry and pricing power that allow companies to generate high returns on capital over long periods of time.