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It is true. If you do have a high-margin business, eventually other people will notice and start to compete which will bring the margins down.
by mattm 7y ago
It is true. If you do have a high-margin business, eventually other people will notice and start to compete which will bring the margins down.
- smarri 7y agoThanks, yes I agree with your point on competition eroding margins. But I think it is nuanced, not all successful business have slim margins, many are awash with cash, Apple for example.
- mattmanser 7y agoA luxury product with high margins that is entirely reliant on branding, and on top of that has a long shelf-life and retailers buy in bulk. Great example! /s
- smarri 7y agoAs are Berkshire Hathaway, Ford, Cisco, Amazon, Alphabet, Microsoft. But that's not the point, the point I'm making is a solvent business should have cash reserves.