The Third Dimension
Nothing is more vital than the profitability of a company. The author says a company that is experiencing high profits is bound to attract new competitors. There are two ways by which a company can sustain its profits:
A. Monopoly - Monopolies are generally illegal, and Fisher doesn’t recommend investing in them.
B. Efficiency - Fisher says that the only way a company can sustain its profits is by operating more efficiently than others.
A company should have the following characteristics if it wants to sustain its profits:
- Economies of scale.
- Low Freight costs.
- Lower costs of production and the ability to attract new customers.
- A prominent shelf place for a product can attract more sales.
- As a company’s costs rise, it should not raise the price of that product more than its competitors.
- Technological Development is another aspect which should be looked into when making an investment.