InvestorQ : Can scale or size of operation really be a moat for a company?
Lavanya Subramanian made post

Can scale or size of operation really be a moat for a company?

Answer
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ishika Banerjee answered.
2 years ago


Scale by itself cannot be a moat but the ability to manage scale profitably can surely be a moat. Similarly, it is not just about random scale, but if the scale results in perfect backward and forward integration of operations then it can be a huge moat. If you have control over the raw material supply and the final demand for your products then you can exercise tremendous control over the market. A classic example is how RIL has done that in the hydrocarbons space. By creating a seamless chain extending from oil exploration, gas exploration, oil refining, oil marketing and petrochemicals it has created cost and revenue advantages that are hard to beat. That explains why RIL enjoys the kind of GRMs that others find it hard to achieve. That is a very important moat for investments.