Competition Demystified: A Radically Simplified Approach to Business Strategy (Hardcover)

~ Bruce Greenwald (Author), Judd Kahn (Author) "For at least the last half century, strategy has been a major focus of management concern..." (more)
Key Phrases: customer captivity, incumbent competitive advantages, instant photography market, Home Depot, United States, Fox Broadcasting (more...)

Editorial Reviews

From Publishers Weekly

A conscious simplification of Michael Porter's classic Competitive Strategy, this book treats only one of Porter's five forces, "potential entrants." According to the authors (Value Investing), avoiding competition is the only way to escape "a level playing field in which anyone can join... [and] only the best... survive and prosper." Most of the book discusses ways to gain protected positions from which businesses can be run badly but still earn abnormal returns. Cutting prices, matching prices and using domination of one market to create a monopoly in another are all discussed; legality is mentioned only briefly and indirectly. The best of their recommendations is to find small, declining, local markets without existing competitors. Despite the title, the book seems aimed more at investors than managers. Stockholders appreciate the value of mediocre companies that generate steady, unexciting profits in local markets without much notice; they like them because the stock is cheap. Managers usually aspire to build something better, in order to make the stock expensive. Still, this book is a useful counterpoint to the idea that conflict and growth are good for their own sakes. (Aug. 18)
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Review

Competition Demystified is superb, with a deft balance between theory and case studies that offer fascinating explanations of strategic adventures... -- The Globe and Mail

the best of the strategy books now or soon to be in the stores... direct, non-academic... occasionally funny -- New York Times

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Product Details

• Hardcover: 416 pages
• Publisher: Portfolio Hardcover (August 22, 2005)
• Language: English
• ISBN-10: 1591840570
• ISBN-13: 978-1591840572
• Product Dimensions: 9 x 6.1 x 1.3 inches
• Shipping Weight: 1.4 pounds
• Average Customer Review: 4.5 out of 5 stars  See all reviews (14 customer reviews)
• Amazon.com Sales Rank: #381,456 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

9 of 9 people found the following review helpful:

4.0 out of 5 stars Much Is Great, Parts Are Questionable, September 6, 2005

By	Ty Rockwell - See all my reviews

This book is wonderful on the basics of competition and market analysis - especially on the role of barriers to entry. Most of the case analyses are strong. For this discussion alone, I would recommend the book to anyone in business. Some of the prescriptive advice/analysis on cooperating with competitors is puzzling. For example, at points it seems the authors believe that collusive agreements between competitors will not reduce innovation. That is hard to swallow. Everyone knows that without a real competitive incentive, R&D costs can and will be deferred in favor of other expenditures. Why improve the cow today, if you can milk the one you have and use the money to buy a beer? The case history on gas additives is silly. The authors admit that the FTC successfully challenged these people at least twice for illegal conduct. Why would their deals be cited as a model for anything that a law-abiding businessperson might consider doing "strategically"? It is not clear that the authors have a firm grasp of the antitrust laws (which can prohibit even "tacit" collusion) or the costs of an antitrust claim - they favor an approach to "competition" (wacking up markets) that runs very close to the line. Antitrust disclaimers are thrown in from time-to-time, but the legal limits of the suggested types of collusion are never adequately explored. Read this well-written book, but use it with caution (and a lawyer).

8 of 8 people found the following review helpful:

5.0 out of 5 stars Excellent Text for an Investor Assessing Strategy, September 5, 2005

By	John A Chew "HUME" (GREENWICH CT) - See all my reviews (REAL NAME)

This is an excellent text for investors wishing to develop their "circle of competence." Analysts often focus on the next earnings report but the most inefficient area of investing and hence the greatest rewards are what will be the value of a company in three to five to ten years. Throw out Beta and your Capital Asset Pricing Model and develop your valuation from a strategic perspective.

Does the company (your potential investment) benefit from barriers to entry? If it does, then what is the source of those competitive advantages: proprietary technical advantage, customer captivity and/or economies of scale? Does your company operate in an industry with market share stability, and does it have high returns on capital to confirm a competitive advantage like Coke and Pepsi in the Soft Drink Industry? If more than one company has a competitive advantage then how do they interact within their industry? If a company does not benefit from incumbent competitive advantages, then is management focused and running their business efficiently?

My point is not to summarize the book but to show the systematic analytical approach used. The authors go through numerous case studies and examples from the perspective of game theory, local economies of scale, branding, M&A, cooperation amongst competitors, competitive interactions, entry strategies and incumbent responses. The key is that you learn a process and approach to understand an industry and the interaction of competitors within that industry. Hence, you will expand your ability to grasp whether a potential investment has sustainable competitive advantages. As Mr. Buffett has often said, "How deep and wide is the moat around your castle?" Don't invest before you can answer that question. If you can't, then walk on by.

I recommend reading Michael Porter's books on strategy but I find this book superior in its clarity and focused approach. The book is almost 400 pages long and to absorb what the authors are imparting will take several careful readings. Strategic analysis even if simplified is not easy. It is more of an art than a science, but then why would the rewards be so great if the analysis doesn't take diligent effort?

By way of disclosure I have audited Professor Greenwald's-standing room only-- classes at Columbia University though I have never met him. He is a remarkably clear and entertainingly effective lecturer who uses recent business cases and events to illuminate his points. Though I am not a big fan of the typical MBA program which reminds me of the "Flat-Earth Society" instructing budding geographers-Beta and the other financial theories make no rational sense-Professor Greenwald's teachings have value. Investors can benefit if they learn how to assess the barriers to entry applicable to their companies.

4 of 4 people found the following review helpful:

5.0 out of 5 stars A guide to becoming a strategist, March 9, 2006

By	Kaihan Krippendorff (Miami Beach, FL) - See all my reviews

My two key takeaways from reading Greenwald's well-argued and counterintuitive premise are:
1. There are but a few fundamental sources of competitive advantage
2. Most companies can tap these sources at a local level (not a national or international level)

These show that the front-line manager - the regional coordinator of retail chain or the country manager of service firm - has the power (and the obligation) to pursue local competitive advantages. Greenwald provides a simple, intuitive method for helping such "front-line strategists" seek out a competitive edge.

I recommend this highly for anyone who aspires to be a strategist.