Locational advantage : Either the company has to be located closer to its raw material source or the market in which it seeks to operate.

 

 

Economies of Scale: WIth increasing capapcity the company generates economies of scale that push down costs even lower.

Tariff : Businesses which survive on tariff and protection measures are never unable to create share holder value.

Entry : Buffet called it the ultimate advantage. " If you gave me US $ 100 billion and say take away the soft drink leadership of coca cola in the world I'd give it back and say it cannot be done"

 

Cartels: These are agrements amongst sellers not to sell below a certain price or to hold back supplies. Generally the life of cartels is very difficult to envisage and therefore they enjoy lower PE's.