As simple as competition

Competition Demystified – this book probably provided more clarity on competitive strategy than all my strategy classes taken together. I picked up this book after I attended a session by Bruce Greenwald – one of the authors of the book (and one of the coolest academics in my opinion)

A simple yet powerful alternative to Porter’s 5 forces* based on one idea: competition is the key driver of strategy; in fact, competition decides whether you should even have a ‘strategy’

competition demystified

His idea is simple:

If your company operates in an industry where there are no inherent competitive advantages or barriers to entry, there’s no need to even have a strategy – just focus on ‘operational efficiency’ and match the other players.

Local economies of scale and Customer Captivity are the only sustainable barriers to entry – and should be protected at all means. Pretty intuitive, except that most people overlook the term ‘Local‘ and go for scale which does not provide cost benefits – scale and majority share in the relevant market matters; share in the overall market doesn’t.

The  book is a precursor to his most popular book on Value Investing (which is lying untouched on my bed) – hope it is as insightful as this one

 

* He claimed in class, that “Porter made 4 forces too many”

 

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