Hello everyone. Welcome to the Motley Fool's

industry focus financials edition. My name is

Gabby leperra and joining us on the phone is John Maxfield.

This week we're going to be talking about competitive advantage.

Specifically we're going to be discussing Michael Porter's work.

He's a pretty fantastic economist with a book titled Competitive Advantage very appropriately. But we're in DC right now and we're not super creative people when it comes to title

so I really appreciate a title that just is what it's about.

So let's talk a little bit about what competitive advantage is.

Porter defines it as a function of either providing comparable buyer value more efficiently than competitors, which is low cost, or performing activities at comparable costs but in unique ways that create more buyer value than competitors, hence command a premium price which is differentiation.

Either of those things help companies maintain an advantage over their competitors and thus provide them with a wider profit margin.

So, and Gabby, if you think about it, right?

One of the guys that, if you're an investor,

one of the people that you read about, that you think about, that you in some ways try to learn

from and mimic is Warren Buffett.

He's the chairman and CEO of Berkshire Hathaway.

And one of the things that Buffett says in his letters, which are just really

quite amazing things for investors to read, is that the most important, the single and most important thing when identifying a good investment that's going to

outperform both its industry and the broader market in general over the long term is identifying

companies with a quote durable competitive

advantage and what Michael Porter does so the question is is

well is this just Warren Buffett you know it's kind of spouting out another awesome quote because I mean he

literally has millions of them in his letters or is there more substance to this right

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