Competition Demystified

A Radically Simplified Approach to Business Strategy

Bruce Greenwald, Judd Kahn

Publisher: Portfolio, 2005, 399 pages

ISBN: 1-59184-057-0

Keywords: Strategy

Last modified: Dec. 14, 2015, 10:50 p.m.

In Competition Demystified, Bruce Greenwald, one of the nation's leading economists, presents a new and simplified approach to business 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 co-author 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 taught in business schools (based on Michael Porter's work in the 1970s and 1980s) 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?

After establishing the overriding importance of barriers to entry, Greenwald and Kahn argue that:

  • there are really only three sustainable competitive advantages;
  • firms operating without competitive advantages should concentrate all their efforts on being efficient;
  • companies that do have competitive advantages need to design strategy with their competitors in mind;
  • most competition is over pricing or capacity, and there are established techniques for analyzing these situations and devising the right strategies to handle them;
  • cooperation between competitors is possible and beneficial and can be accomplished without breaking the law;
  • in an increasingly global economy, competitive advantages still stem primarily from local conditions. Even large international firms need to understand and protect the local sources of their success.

The authors illustrate their principles with detailed examples drawn from prominent companies in a wide range of industries, including Wal-Mart, Coors, Cisco, Apple, Microsoft, Intel, Kodak, Sotheby's, Fox Broadcasting, and Coca-Cola.

Competition Demystified is an indispensable book for business leaders and will change the way strategy is taught for years to come.

  1. Strategy, Markets, and Competition
  2. Competitive Advantages I
    Supply and Demand
  3. Competitive Advantages II
    Economies of Scale and Strategy
  4. Assessing Competitive Advantages
  5. Big Where It Counts
    Wal-Mart, Coors, and Local Economies of Scale
  6. Niche Advantages and The Dilemma of Growth
    Compaq and Apple in the Personal Computer Industry
  7. Production Advantages Lost
    Compact Discs, Data Switches, and Toasters
  8. Games Companies Play
    A Structures Approach to Competitive Strategy
    Part I: The Prisoner's Dilemma Game
  9. Uncivil Cola Wars
    Coke and Pepsi Confront the Prisoner's Dilemma
  10. Into the Henhouse
    Fox Becomes a Network
  11. Games Companies Play
    A Structured Approach to Competitive Strategy
    Part II: Entry/Preemption Games
  12. Fear of Not Flying
    Kiwi Enters the Airline Industry
  13. No Instant Gratification
    Kodak Takes On Polaroid
  14. Cooperation Without Incarceration
    Bigger Pies, Fairly Divided
  15. Coopoeration
    The Dos and Don'ts
  16. Valuation From a Strategic Perspective
    Improving Investment Decisions
  17. Corporate Development and Strategy
    Mergers and Acquisitions, New Ventures, and Brand Extensions
  18. The Level Playing Field
    Flourishing in a Competitive Environment
    • Flourishing in a Competitive Environment
  • Appendix: Methods for Measuring Return on Resources or Investments

Reviews

Competition Demystified

Reviewed by Roland Buresund

Decent ****** (6 out of 10)

Last modified: Dec. 14, 2015, 10:51 p.m.

An interesting take on Competitive Strategy. The authors make the case that the only of the five forces that you should care about is the Barriers of Entry, and proceeds to rather long-winding try to prove it. Reading this in 2015 (the book is written in 2005), you easily detect that a lot of their reasoning and examples are plain wrong and in hindsight ridiculous. With that said, they have some interesting viewpoints, that could be valid to be aware of (even if I personally don't share them), so I have to give it a decent rating anyway.

Don't put it on the top of your reading list, but it should be read if for no other reason than to make you think in alternative ways.

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