Wednesday, 8 October 2008

The Healthy Business: The Consumer Monopoly (Where Warren Finds all the Money)

A consumer monopoly is a type of toll bridge business. If you want to buy a certain product you have to purchase it from that one company and no one else.

Warren Buffett's test for a consumer monopoly is to ask himself whether it would be possible to create a competing business even if one didn't care about losing money.

A consumer monopoly sells a product where quality and uniqueness are the most important factors in the consumer's decision to buy.

Consumer monopolies, though excellent businesses, are still subject to the ups and downs of the business cycle and the occasional business calamity.

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