Competition Demystified: A Radically Simplified Approach to Business Strategy

This is a fabulous book on learning about a company's moat. Warren Buffett coined this term, which simply means a competitive advantage. A moat protects the company's revenues from competitors just like a moat protected a castle from invaders. I found this book extremely helpful because it helped me with competition and market analysis. I also read Michael Porter's books and I enjoyed them very much, but this book was simpler to understand. In this book, readers learn how to evaluate if the company has any benefits from barriers to entry and whether the moats come from a proprietary technical advantage, customer captivity or economies of scale. For readers looking for more books on this subject, I also recommend The Little Book That Builds Wealth by Pat Dorsey of Morningstar. In his book, he describes that moats can come from intangible assets, switching costs, network effect, and cost advantages. - Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

Every business student studies Corporate Strategy at one point or another. There are a huge number of books, articles, and prayers associated with this subject. Some classes become so complex that students sink from the weight of detail. Other classes are so superficial that the student walks away with what amounts to one of those tiny Swiss Army Knives with a blade, scissors, nail file, toothpick, and tweezers. Good luck with that! If you are one of those that wants to get a handle on Corporate Strategy in a clear and usable way, this terrific book is for you. Bruce Greenwald teaches a very popular course on the subject at the Columbia Business School and offers this book to business practitioners and students alike. My own view is that he has given us a real gift. It isn't that I reject Porter, in fact I am a huge fan, but this gives us another approach to the subject and its complexities. The book has 18 well organized chapters. If you have had a course on strategy you will recognize the topics and the progression. However, this book handles these topics in such insightful ways that you will find yourself nodding your head and seeing something familiar but for the first time. By that I mean, you will see something you already know with fresh and deeper insight so that it becomes new and more useful to you. I also like the way Greewald (and Judd Kahn) use the examples from the business world. They aren't the typical b-school studies written to teach some key points. Sure, the stories provided here are used to illustrate specific points, but their real world complexities are shown and the ups and downs of the companies (see the story on Compaq, for example) are frankly shown. I enjoy that because too many books use the state of companies near the date of their publication to illustrate good or bad companies and managers. In fact, all companies have their ups and downs. Yes, bad executive management can destroy a company, but a company can have a great CEO and a good strategy and still have something go against them that puts real pressure on the company and its model. The authors also use charts, tables, and graphs very effectively to make their points more clear rather than as eye candy. Too many texts insist on more graphics than necessary to hold the interest of students. For me, those books are cluttered. Here, the graphics add to the information we get from the text. I think this is a book every business person will want on their shelf and will refer to again and again. The stories will stick in your memory and serve as exemplars or cautionary tales (or both). Recommended! Reviewed by Craig Matteson, Ann Arbor, MI

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.

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.