How to non financially see if a company has good competitive advantage?

[wahkao]

How to non financially see if a company has good competitive advantage?

In stock market, when we do value investing, we buy companies with good competitive advantage. How to see a company to determine it has good competitive advantage?

Financially it is easy to see. Just see the profit margins VS industry. Or follow warren buffet's durable competitive advantage financial screens. How about non financially?

Let me put a few models here for discussion
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[scottleey]

I think competitive advantages are hard to analyse although it may seem to many people easy.

Other than those mentioned, I feel there are some that are not well understood.
It also requires a fair bit of digging into particular industries.

For Buffett, for his past few decades of buying, there had been just a handful of good competitive advantages.
1) Newspapers - (last time not now, Buffalo News, Washington Post) Typically because these companies with the most circulation gets the most advertising dollars which in turn perpetuates better editorial that further grab share from other papers. Normally, each town has 1-2 newpaper companies so its hard to see on the numbers but it is possible only by understanding the business.

2) Regulation - (Cap Cities, Broadcast stations, Moodys) If you have a regulation that restricts competition, you have a good business. Broadcasting license in the US are granted by the FCC. These are not so common and usually, one broadcast station to one town or city. So you essentially have to need to upgrade systems or buildings because you have no competition. In Moody's case, it is the regulation that requires insurance companies to only buy credit rated instruments to hold against capital ratio. This is to prevent insurance companies from speculating. So companies that issue debt need credit ratings. More so, in the structured finance area (I understand the debate, so I am assuming here in the nominal case)

3) Physical - (Cable companies) If you are going to lay lines in a particular town, you get a first mover advantage. You can price in many towns with no competition. If someone wants to lay lines in a town, you can start lowering the price for your cable channels. In that way, your competitor would have figured out not to lay lines to compete directly.

4) Franchise -(KO, Amex, See's) Although in KO and Amex, the structure of the industry helped. Meaning that not only were KO and Amex consumer franchises, KO has a wide distribution network that lowers cost for the company without sinking in capital because they assign the syrup to bottlers. In Amex case, it has a closed loop system, compared to MA and Visa of an open loop system. Either ways consumer franchise still play a deep qualitative role in security analysis.

My observations.