9. Competitive Advantage
The competitive advantage of a company underpins future earnings and increases the reliability of profit forecasts. Sometimes called ‘a business franchise’, it can arise in several different ways:
- Top-class brand names. Coca-Cola, McDonalds, Marks & Spencer (St Michael) and Sony spring to mind.
- Patents or copyrights. Glaxo Wellcome’s Zantax, was, for many years, an excellent example. Copyrights for records, books and films now have immense value with growing worldwide demand from cable and satellite television.
- Legal monopolies. Water and electricity companies are protected from competition, but they are also regulated. Companies in television, like Carlton and Granada, have immensely valuable franchises, although ...