Competition Demystified: A Radically Simplified Approach to Business Strategy
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- Create Date：2021-06-02 10:54:12
- Update Date：2025-09-06
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- Author：Bruce C.N. Greenwald
- ISBN：1591841801
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Summary
Bruce Greenwald， one of the nation？s leading business professors， presents a new and simplified approach to strategy that cuts through much of the fog that has surrounded the subject。 Based on his hugely popular course at Columbia Business School， Greenwald and his coauthor， Judd Kahn， offer an easy-to-follow method for understanding the competitive structure of your industry and developing an appropriate strategy for your specific position。
Over the last two decades， the conventional approach to strategy has become frustratingly complex。 It？s easy to get lost in a sophisticated model of your competitors， suppliers， buyers， substitutes， and other players， while losing sight of the big question: Are there barriers to entry that allow you to do things that other firms cannot？
Over the last two decades， the conventional approach to strategy has become frustratingly complex。 It？s easy to get lost in a sophisticated model of your competitors， suppliers， buyers， substitutes， and other players， while losing sight of the big question: Are there barriers to entry that allow you to do things that other firms cannot？
Reviews
Aditya Baliga
，
Hard read but a great book
Stephen Hemingway
，
Very readable， but somewhat dated now。The one thing I took away from this book which was somewhat of a surprise was that a competitive advantage is really difficult to sustain when you have a large part of the market， but is relatively easy for a very geographically contrained market。So， you can get a sustainable extra return on capital from a corner shop more readily than from being Amazon。This sounds counterintuitive at first， but when you consider that Amazon has basically never made any mone Very readable， but somewhat dated now。The one thing I took away from this book which was somewhat of a surprise was that a competitive advantage is really difficult to sustain when you have a large part of the market， but is relatively easy for a very geographically contrained market。So， you can get a sustainable extra return on capital from a corner shop more readily than from being Amazon。This sounds counterintuitive at first， but when you consider that Amazon has basically never made any money from its retail operations， it begins to make sense。 （Amazon does make a lot of money from AWS， which is a relatively new business， but its original template of selling books and easily mailed objects via a website is easily copied and has never really made money。）。 Being a bit out of date， one can read this with a critical eye。 One part seems to argue that Apple's very hybrid strategy was doomed， relative to the laser focus of Intel。 With the benefit of hindsight， we can see that this did not exactly pan out！ 。。。more
sherry
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The real world case studies of different types of barriers to entry （or lack thereof） is where Competition Demystified shines， but the moment Greenwald pulls back for theoretical explanations， my interest would wane。 Maybe it’s because I’m more of an ‘S’ than an ‘N，’ but some parts of this book were so excruciatingly dry， it literally put me to sleep。 For this reason， my initial reaction was to give this book 3-stars， but shockingly， I’ve already put the frameworks discussed to work multiple tim The real world case studies of different types of barriers to entry （or lack thereof） is where Competition Demystified shines， but the moment Greenwald pulls back for theoretical explanations， my interest would wane。 Maybe it’s because I’m more of an ‘S’ than an ‘N，’ but some parts of this book were so excruciatingly dry， it literally put me to sleep。 For this reason， my initial reaction was to give this book 3-stars， but shockingly， I’ve already put the frameworks discussed to work multiple times after reading so bumped up to a 4-star rating。 Although I did think many of the insights were not hugely surprising for those familiar with formulating business and expansion strategies， I appreciated how clearly and cleanly Greenwald bucketed the factors that give rise to strong barriers to entry in a market， as well as how to determine if an existing industry enjoys the benefits of barriers to entry。 Some unstructured， likely obvious， but nevertheless key， applicable takeaways for me （so far）: - First mover does not always mean advantage - Localization can trump globalization when it comes it economies of scale- Operational efficiency can be the key to survival （not exactly what Greenwald meant， but I found it interesting to consider for those of us in tech who have had to ‘trim the fat’ during the pandemic after a long period of enjoying cheap， accessible venture capital）- Differentiation and brand isn’t nearly as valuable as people tend to believe - Customer loyalty / habits are hard to build but harder to erode （e。g。 soda drinkers） - Synergy， as I’ve suspected all these years， is just a big fancy word business people use to show off their big fancy brain; acquisition should only be considered if it is the cheapest， cost-saving optionDespite being a pretty half-hearted business thinker and someone who hate-reads business books， I have found myself considering revisiting parts of this book to glean additional insights。 。。。more
Vignesh Yelluri
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My first book on business。 From 0% knowledge， I was able to understand a great deal about how businesses fight for survival and what has to be done to make a business successful。Indeed， Businesses are modern warfare。 Either they fight / form alliances / interestingly also settle for a peace deal。
Bunmi
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Surprisingly easy to read， and very enjoyable。
Zhou Fang
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Competition Demystified is an insightful approach at simplifying Michael Porter's approaches in Competitive Strategy， and one of the best business strategy books I've read。 Bruce Greenwald's central contention is that barriers to entry is by far the most significant competitive force， and focuses his analysis around it as the defining characteristic of competitive advantage。 This is because barriers to entry are what allow a firm to sustain high levels of profitability in excess of cost of capit Competition Demystified is an insightful approach at simplifying Michael Porter's approaches in Competitive Strategy， and one of the best business strategy books I've read。 Bruce Greenwald's central contention is that barriers to entry is by far the most significant competitive force， and focuses his analysis around it as the defining characteristic of competitive advantage。 This is because barriers to entry are what allow a firm to sustain high levels of profitability in excess of cost of capital。 Otherwise， firms would enter the industry and compete those excess profits away。 There are 3 types of competitive advantages which give rise to barriers to entry:1。 Supply - generally weak advantages characterized by competitive costs such as input， labor， capital， proprietary tech， etc。 These advantages tend to erode over time as competition and know-how in the industry increases。2。 Demand - there are 3 types of demand advantages that can be createda） Habit - recurring purchases of the same product， such as Crest toothpaste or Cokeb） Switching costs - both actual and frictional costs of switching from one product to another。 This is most apparent today in software businessesc） Search costs - expensive/hard to find a replacement。 May require significant time， or outside consulting， with low clarity on the usefulness of information on the marketplace3。 Economies of scale - the ability to use higher market share （not just size） to spread fixed costs required to serve a particular market across many units。 Economies of scale have to be defended as narrowing in market share allows competitors to catch up and fixed costs as % of total costs declines。 a） A key insight Greenwald provides is that counterintuitively， economies of scale are LOCAL either in geography （that fixed costs can serve） or product line （that advertising can support）。 The goal is to keep fixed costs required to serve a particular market high， and thus raise the bar for share win required to make entry to the market economically rational。 Wal-Mart successfully created dominance in small towns and extended that dominance regionally based on this strategy。 Coors' ambitions to be a national beer caused its dominance in its local markets to wane over time， and coincided with both share decline in its dominant markets and profitability decline。b） Equally counterintuitively， based on Greenwald's logic， fast market growth is a LIABILITY in terms of competitive advantage， since it lowers the share hurdle required for competitors to make the fixed cost investments。 Compaq's early dominance in the PC market based on quality eroded as the market grew significantly and price to value propositions improved for its competitors。 The optimal strategy， then， is to create economies of scale combined with customer captivity。Along the way， Greenwald also makes some very insightful points in other areas:1。 Differentiation is irrelevant - People often focus on brand-driven and premium products without realizing that 1） differentiation isn't free （R&D and marketing have to be constantly invested） and as a result 2） such products do not earn above commodity-like returns on capital。 For example， although Mercedes-Benz clearly produced a premium branded product， the company never earned above-average profits compared to the auto industry。2。 Competitive advantage can be identified in an industry if a） market share is stable across a few firms （they don't vary significantly year-to-year） and b） dominant firms actually earn high returns on invested capital3。 Because competitive advantages tend to be local in nature， excessively aspirational strategies such as end-to-end control of a product get dragged down by the weakest links in the supply chain。 This was the problem Apple faced in the PC market。 Competitive advantages in one area do not translate well to other fields （large demand for HP printers do not translate to large demand for HP computers as a significant appeal of HP printers was their compatibility for multiple machines） 4。 Advantages of being a first-mover in an industry have to be weighed against the risk of being locked into first-generation capital equipment。 Later entrants may have a lower cost of capital as the equipment improves which leads to lower production costs5。 Competitive conditions in markets can be modeled on game theory。 The overarching goal is to try to shift away from prisoners' dilemma type games into cooperative games。 There are several approaches by which this can be done， all of which have to be weighed against antitrust laws:a） Focus on non-overlapping products/geographiesb） Customer-loyalty programs - these have to be based on volume （more rewards as customers spend more） to create stickiness over timec） Limit output capacity - TV ad-times were agreed to be 8 minutesd） MFN pricing/price match to limit benefits of price wars （Best Buy price matching， etc。）e） Limit purchasing/pricing decisions to narrow the window of competition （TV ads were sold in a fixed month timeframe）The example employed was an in-depth case study on Coke vs。 Pepsi's price wars in the '70s。 This extended price war finally ended when Coke spun off its bottling business into a separate enterprise with significant debt which signaled a detente。6。 Capacity additions are not reversible which creates asymmetric dynamics。 Thus to prevent significant retaliation， must generally approach incumbents with strategy that do not obviate the need to retaliate。 For example， encroaching on small territories of multiple incumbents because anyone that responds risks significant collateral damage to their overall business as well as competitive retaliation by other larger incumbents。 Kodak's entry into Polaroid's market was a mistake in this vein because Polaroid was dominant in its instant-photography market so the stakes were extremely high。7。 Acquisitions are generally value destructive; they provide no synergies and are often eventually divested。 For an acquisition to really produce value， it must produce cost synergies that outweigh both 1） the cost of distraction of getting those synergies applied at the parent level which would not otherwise be present had the acquisition not occurred 2） the premium paid to control the company。8。 Brand value is different than economic value of the brand。 Brand value is the premium a consumer is willing to pay for a product （luxury products for example）。 Economic value of a brand is the return the brand provides （Coke has low brand value but extremely high economic value）。 9。 Management attention makes a big difference in operational efficiencyOverall I think this book is very insightful and definitely worth the read by any student of business。 Its litany of examples， sometimes in-depth， are vivid illustrations of the theoretical framework of the book。 I do think it suffers a bit from an overly academic approach--everything is thought of in terms of what is expected once economic equilibria are achieved， and there is lengthy focus on explaining and illustrating game theory approaches which have limited practical use aside from the bigger concepts。 Nonetheless， the book is worth the read。 。。。more
Nathan
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Amazing overview of competitive strategy！
Yechan
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The world has changed a lot since 15 years ago， but the core ideas from the first seven chapters are still relevant to a large extent。 For example， Competitive advantages can usually be found in a local environment or a specific product/service domain， and large markets or fast-growing markets are not conducive to the creation of competitive advantages。
Cedric Chin
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Worthwhile only for the historical contribution to the literature around competitive strategy。 The book’s primary contribution is the observation that it is barriers to entry that is important for competitive strategy。 Greenwald believes this formulation is better than Porter’s original conception of the Five Forces， because a focus on one force is far simpler （while still retaining a large amount of explanatory power）。 The problem， of course， is that Greenwald’s way of looking at things isn’t e Worthwhile only for the historical contribution to the literature around competitive strategy。 The book’s primary contribution is the observation that it is barriers to entry that is important for competitive strategy。 Greenwald believes this formulation is better than Porter’s original conception of the Five Forces， because a focus on one force is far simpler （while still retaining a large amount of explanatory power）。 The problem， of course， is that Greenwald’s way of looking at things isn’t exactly right either， as there are ‘barriers’ to competition that don’t prevent against entry （one thinks of the pricing power that is attributable to companies with good brands， that don’t really serve as a barrier to entry but provides a source of differentiated margins anyway）。I think one belief that leads the book astray is the idea that market share *and* sustained high ROIC are signs of the existence of competitive advantage。 I believe this formulation is no longer the commonly held one。 Michael Mauboussin’s paper Measuring The Moat and Hamilton Helmer’s 7 Powers prefer to use long term sustained ROIC as a measure of moat， which I think is the right way of thinking about this， since there are relatively few competitive advantages that prevent new entrants from taking market share from the incumbents。 It is the ability to maintain sustained margins over the long term that truly matter， even if you are in an industry where it is difficult to keep new entrants out。The rest of the book， in particular the framing of competitive strategy in terms of game theory and entry/preemption games is far too simplistic， and smell of theory-making in lieu of actual practical application。My recommendation is to skip this entirely and to go with Hamilton Helmer’s 7 Powers。 That book supplants this one in pretty much every way， both in theory （it is more complete） and in practice （Reed Hastings swears by it and forces all high ranking managers at Netflix to study it; Helmer has used it for his investing strategy for the past two decades）。 。。。more
Allen
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First 4 - 6 chapters are incredibly valuable。 Gets pretty boring after that。 A semi-dry read/
Andrew
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A great strategy book that serves the purpose of understanding the moat too。 I read this book once every year。
Rosemary Bridge
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Good in parts， some interesting insights eg the importance of stable market share in indicating competitive advantage; also the importance of management focus in delivering above average profit ratios。 Examples unsurprisingly very US centric and an updated version would be good。
Tyler Fitt
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Read it because it was recommended to me by a friend， I do say that my review is a little bias as I have recently completed a course on strategic management at my university。 That being said I found a lot of the information to be somewhat common sense。 Didn't learn anything new really。 Read it because it was recommended to me by a friend， I do say that my review is a little bias as I have recently completed a course on strategic management at my university。 That being said I found a lot of the information to be somewhat common sense。 Didn't learn anything new really。 。。。more
Mads Horsted
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Really valuable and useful。 Similar concepts to IOA。
Madeleine
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26 28- “In the long run， everything is a toaster” 28- Habit 33， captive customers occur when it is more costly/expensive to leave you than to stay- Easier to gain competitive advantages in small markets than big ones （not necessarily better though） bc easier time create and maintain barriers to entry - If you have economics of scale， match the moves of an aggressive competitor entrant （from incumbent position）- To succeed in certain business situations， better to shut competition out than differ 26 28- “In the long run， everything is a toaster” 28- Habit 33， captive customers occur when it is more costly/expensive to leave you than to stay- Easier to gain competitive advantages in small markets than big ones （not necessarily better though） bc easier time create and maintain barriers to entry - If you have economics of scale， match the moves of an aggressive competitor entrant （from incumbent position）- To succeed in certain business situations， better to shut competition out than differentiate - Make it less painful for incumbents to tolerate you than to hurt you 。。。more
Anil Tulsiram
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The best thing about this book is the examples of various companies。。。。。My suggestion is read theory from Understanding Michael Porter and follow examples of this company。。 I read theory of just few first chapters and then exclusively focused on examples。。。。
Peter S
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I really enjoyed first 3 chapters， then things got a little dense and uninteresting。 The chapter on valuation （I believe it was 16） was excellent。
Terry
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This is a book about how to analyze competitive advantage。 Some key points:1。 Three sources of competitive advantage （supply， demand， economy of scale）2。 Confirm whether a firm has competitive advantage - stable market share， high ROIC3。 Barrier to entry > differentiation 4。 Economy of scale - not on absolute size， but on relative， market share - small market is more easy to build economy of scale - growth is the enemy - 5。 What is not competitive advantage （access to capital， talents， labor， This is a book about how to analyze competitive advantage。 Some key points:1。 Three sources of competitive advantage （supply， demand， economy of scale）2。 Confirm whether a firm has competitive advantage - stable market share， high ROIC3。 Barrier to entry > differentiation 4。 Economy of scale - not on absolute size， but on relative， market share - small market is more easy to build economy of scale - growth is the enemy - 5。 What is not competitive advantage （access to capital， talents， labor， technology （in the long run， everything is a toaster））， pure branding6。 What is competitive advantage - Habit - Switch cost - Search costBut I wish there’s an updated version of it， because all the cases are from 20 years ago， some of them have already continued to play out in a way that Greenwald didn’t expect。 。。。more
Andrew
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I thought the first few chapters of this book were great in which they highlighted the key concepts of having a competitive advantage。 However， thought the rest of the chapters did not provide me with a lot of additional insight/knowledge。
Z。
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first half is some of the best business analysis of all time
Axel Cateland
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Probably one of the best book I ever read on Business Management and how to grow a business。Bruce Greenwald is probably one of the most ignored business genius， and this is one of his masterpiece。A must read！
Yoon Kim
，
2020。04
Xiangjie
，
Clearly explained what is competitive advantage - demand， supply and economy of scale。 The most sustainable is economy of scale combined with customer captivity。 And valuation that reflect competitive advantage analysis， from balance sheet， to current earning power to growth， which is only good when competitive advantage exists。 It also extend this logic to evaluation of M&A， venture and brand extension。 When there is no competitive advantage， management matters and the focus should be on operat Clearly explained what is competitive advantage - demand， supply and economy of scale。 The most sustainable is economy of scale combined with customer captivity。 And valuation that reflect competitive advantage analysis， from balance sheet， to current earning power to growth， which is only good when competitive advantage exists。 It also extend this logic to evaluation of M&A， venture and brand extension。 When there is no competitive advantage， management matters and the focus should be on operational efficiency， which could sustain long-term superior return and may change rapidly when management focus elsewhere。 。。。more
Nikki Fernandez
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The best business book I have ever read。 Also the focal point of my favorite class at Columbia Business School。 It changed the way I think about competition and business on a fundamental level。 Highly recommend。
Burcu
，
cok sıkıldım okurken， tam bir ders kitabi gibi
Shraddha Pant
，
I started this book shortly after reading "Understanding Michael Porter" by Joan Magretta， in which the author casts light on how to understand porters' five forces and the implications of each force in the business and the consequent strategy to devise for the businesses。When I started the book， I was disappointed to learn that the author - Bruce C N Greenwald would try and belittle the five forces framework by Porter and given that I had recently been impressed with the depth at which Joan elu I started this book shortly after reading "Understanding Michael Porter" by Joan Magretta， in which the author casts light on how to understand porters' five forces and the implications of each force in the business and the consequent strategy to devise for the businesses。When I started the book， I was disappointed to learn that the author - Bruce C N Greenwald would try and belittle the five forces framework by Porter and given that I had recently been impressed with the depth at which Joan elucidated Porter's work， I started the book on a rather grim note。 However， as I proceeded further， I grew into appreciating the idea that among all the forces in Porter's framework， the most important one is Entry Barriers， which determines the profits that the incumbent firms enjoy。 Based on the premise that barriers to entry is the most important force that shape up competition and industry returns， the author goes on to cast light on the nuances of strategy that are sensible when the entry barriers are present/absent。I particularly enjoyed reading chapter 16 through the end， as the author delves into the shortcomings of NPV method of assessing firms' （or project） values then points out importance of understanding porters' five forces along with the relevance of business （growth） in the future to make more logical assessment of a business's value。I am glad that reading the entire book （as opposed to leaving it after my initial disappointment） turned out to be the right choice。 This book is a good read for any one that is interested in understanding why businesses do well at the fundamental level and the relevance of strategic approach to valuation of a business。 Happy reading！ 。。。more
Sid
，
Good book，3。5 starsInteresting case studies。 But a lot of the premise is if all competitors behave rationally and in a time bound manner。 Well the honest truth is things are not so rational except in hindsight， and allocators of capital make a lot of decisions based on different perceived notions than maximizing allocation of capital。there is also a big question on time。 Any barrier of entry will take time to overcome and there is plenty of gold to be found between that timeframe。
D
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One of the best business books ever written。 A clear and enlightening view on how companies compete and what drives competitive advantage。
Alessandro Orlandi
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I didn't love it all， but there are some chapters that are really interesting。 I loved the chapter on Nintendo and the lasts chapter are really good。 Generally could have been explained all in half the number of pages。 I didn't love it all， but there are some chapters that are really interesting。 I loved the chapter on Nintendo and the lasts chapter are really good。 Generally could have been explained all in half the number of pages。 。。。more
Arif
，