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Competition Demystified: A Radically Simplified Approach to Business Strategy by [Greenwald, Bruce C., Kahn, Judd]
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Competition Demystified: A Radically Simplified Approach to Business Strategy Kindle Edition

5.0 out of 5 stars 4 customer reviews

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In the best of the strategy books now or soon to be in stores, [Greenwald] has proposed a fairly straightforward way to think about strategy that makes the subject substantially simpler.
"The New York Times"
Case studies and sharp analysis make this a book worth pondering. . . . They make a compelling case.
A truly fabulous read.
"Competition Demystified" is a brilliant challenge to Michael Porters "Competitive Strategy,"
Sylvia Nasar
"Superb, with a deft balance between theory and case studies that offer fascinating explanations of strategic adventures by prominent companies"
"The Toronto Globe and Mail"

aIn the best of the strategy books now or soon to be in stores, [Greenwald] has proposed a fairly straightforward way to think about strategy that makes the subject substantially simpler.a
a"The New York Times"
aCase studies and sharp analysis make this a book worth pondering. . . . They make a compelling case.a
aA truly fabulous read.a
a"Competition Demystified" is a brilliant challenge to Michael Porteras "Competitive Strategy,"a
aSylvia Nasar
"Superb, with a deft balance between theory and case studies that offer fascinating explanations of strategic adventures by prominent companies"
a"The Toronto Globe and Mail"

?In the best of the strategy books now or soon to be in stores, [Greenwald] has proposed a fairly straightforward way to think about strategy that makes the subject substantially simpler.?
?"The New York Times"

?Case studies and sharp analysis make this a book worth pondering. . . . They make a compelling case.?

?A truly fabulous read.?

?"Competition Demystified" is a brilliant challenge to Michael Porter's "Competitive Strategy".?
?Sylvia Nasar

"Superb, with a deft balance between theory and case studies that offer fascinating explanations of strategic adventures by prominent companies"
?"The Toronto Globe and Mail"

About the Author

Bruce Greenwald is the Robert Heilbrun Professor of Economics at Columbia University Business School, where his class on strategy draws standing-room-only crowds.

Product details

  • Format: Kindle Edition
  • File Size: 2118 KB
  • Print Length: 428 pages
  • Page Numbers Source ISBN: 1591840570
  • Publisher: Portfolio (18 Aug. 2005)
  • Sold by: Amazon Media EU S.à r.l.
  • Language: English
  • ISBN-10: 1591840570
  • ISBN-13: 978-1591840572
  • Text-to-Speech: Enabled
  • X-Ray:
  • Word Wise: Enabled
  • Enhanced Typesetting: Not Enabled
  • Average Customer Review: 5.0 out of 5 stars 4 customer reviews
  • Amazon Bestsellers Rank: #178,908 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Format: Kindle Edition Verified Purchase
Although the case stories were often quite old this was a very throroughly grounded book and made some real contributions to strategy theory by integrating strategic analysis, economic value and game theory in a deeper way than in my own PHD on linking the two which two decades ago made real progress on this richly complex area.It did a very deep critique of more naiive valuations of businesses and strategies using EVA although I would differ a bit in their possibly over prudent suggestions on how to frame the assumptions.I will be using this debate on my next course! They were spot on in highlighting how often growth destroys shareholder vaue- Dr Tony Grundy
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Format: Hardcover
There are so many excellent books already in print that focus on the formulation, implementation, and refinement of business strategy. (Several are identified within this book's Notes section.) That said, I remain convinced that senior-level executives should complete some due diligence on several volumes available by reading the comments on those which are rated highest in the Customer Reviews provided by Amazon. I also think it desirable to consult more than one source (preferably several) which seem most relevant to the specific circumstances within the given organization.

In this volume, Greenwald and Kahn succeed remarkably well with clarifying their readers' "understanding of strategy and to reframe their approach to it. We want executives to know how their markets work, where there competitive opportunities lie, and how to develop and protect them. To this end, we include both broad discussions of general principles and detailed case studies of actual competitive interactions. Taken together, we think they present a useful guide for people who make strategic decisions."

In large organizations, there are entire departments responsible for strategic planning. (Obviously, their efforts are supervised by senior-level executives and usually a board member or two.) In much smaller organizations, strategic planning may be conducted by the owner/CEO alone or by one or two executives. Whatever the situation, strategies are still "hammers" which drive "nails" (i.e. tactics) and invariably require both long-term commitments and substantial allocation of resources. Strategies are the cornerstones of plans for achieving and then sustaining success, plans which specifically focus on the actions and responses of competitors.
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Format: Paperback
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
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Format: Paperback Verified Purchase
It's a great all-rounder book and teaches in very simple terms and vivid examples about competitive advantages and strategy. It's an easy read of essential concepts that I think everyone should have a good understanding of - I can't think of any position in a firm that this book wouldn't benefit.
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Most Helpful Customer Reviews on Amazon.com (beta)

Amazon.com: HASH(0x96997678) out of 5 stars 38 reviews
31 of 31 people found the following review helpful
HASH(0x9689d348) out of 5 stars Excellent Text for an Investor Assessing Strategy 5 Sept. 2005
By John A Chew - Published on Amazon.com
Format: Hardcover
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.
22 of 23 people found the following review helpful
HASH(0x9689d39c) out of 5 stars Much Is Great, Parts Are Questionable 7 Sept. 2005
By Ty Rockwell - Published on Amazon.com
Format: Hardcover
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).
15 of 15 people found the following review helpful
HASH(0x9689d7d4) out of 5 stars Collusion is good 24 Mar. 2013
By Lance Volta - Published on Amazon.com
Format: Paperback
Competition is great for consumers, but it's a nightmare for businesses. For investors, nothing beats a monopoly, and that's the guiding principle of Greenwald's book. Of course, monopolies tend to be very rare, local, and low-growth, but Greenwald's advice is to settle for the next best thing: duopolies. Duopolies are industries in which the largest competitors have agreed not to compete, or to compete on everything but price. Pepsi and Coke, Polaroid and Kodak, these are also examples of effective price makers. Greenwald shows that these companies, probably understood, are the equivalent of monopolies.

The biggest shortcoming is that the chosen case studies are so well known and trite. The story of Coke and Pepsi is so familiar, what's the point of telling it again? If you regularly read Forbes of Fortune magazine, little in this book will be new information. Second, the author never peers below the surface or offers any counterintuitive examples. Are there examples of duopolies or competitive moats that at first don't seem very formidable? For those with more experience in the strategy literature, going back over familiar terrain might be a slog.

More broadly, Mr. Greenwald's advice - avoid competition - is too pat; the vast majority of businesses exist in the continuum between monopoly and pure competition. Where are the hidden monopolies? Can superior execution be a sustainable advantage? The case histories are stylized and the lessons drawn are too superficial.
25 of 31 people found the following review helpful
HASH(0x9689dba0) out of 5 stars Interesting Insights, Flawed Conclusions! 12 Jan. 2006
By Loyd Eskildson - Published on Amazon.com
Format: Hardcover
Greenwald lays out what he calls a simplified theory of competitive strategy," followed by analyses of a number of real-life situations. While the theory usually makes sense, Greenwald's application is not always as compelling.

"Competition Demystified" begins by observing that for at least the last half century, strategy has been a major focus of management concern. Sometimes enormous consequences flow from decisions not even thought to be strategic - eg. IBM's outsourcing creation of its PC operating system and CPU manufacturing. Regardless, effective strategy is central to business success.

Greenwald says that the first issue is selecting the arena of competition, and the second involves management of external agents. Barriers to entry is the area one should focus on first, and primarily in these analyses. If there are no barriers many strategic concerns can be ignored - the only option is to focus on being as efficient and effective as possible.

Greenwald believes that competitive advantages that lead to market dominance are much more likely to be found in a local arena (either geographic or product space). Further, there are only three kinds of genuine competitive advantage: supply (privileged access, proprietary technology protected by patents or experience), demand (eg. psychological or actual costs of switching - includes branding, loyalty programs, laborious setup and coordination issues), and scale economics.

An elephant (vs. ants) with a competitive advantage has as its priority to sustain what it has, and must recognize the sources and limits of its competitive advantages. Alternatively, companies with a competitive advantage may have potent competitors (eg. Coke - Pepsi, Boeing - Airbus). In this situation strategy formulation is most intense and demanding. They need to know what those competitors are doing and anticipate reactions to moves the company might make.

A common managerial axiom is to avoid commodity businesses - differentiate. However, Greenwald says that this doesn't work - Mercedes and Cadillac are clearly differentiated products, but their high original returns attracted new entrants (Lexus, BMW, Accura) and they now earn only average returns. (Another alternative is for existing competitors - eg. Lincoln - to expand; Lincoln, however was not successful in accomplishing this.) "Competitive Demystified" also notes that over-capacity, especially in a capital-intensive area - airlines, can create long-term poor profits. (This contradicts Southwest Airlines' success.)

Simple products and processes are not fertile ground for proprietary technological advantage. These are hard to patent (looks like "common sense") and easy to transfer (competitors could hire away employees). Similarly, technological advantages primarily provided by consultants or suppliers cannot be markets with substantial competitive advantages provided by technology.

The best strategy for an incumbent with economies of scale is to match the moves of an aggressive competitor - be they price cut, new product, or new frill. Any market share lost to rivals narrows the leader's edge. (Alternatively, competitive advantage based on customer captivity or cost advantages is not affected by market share loss.)

Greenwald believes that only a few industries have scale economies that coincide with global size - eg. Microsoft, Intel. Most are local. Meanwhile, growth of a market is generally the enemy of advantages based on scale.

Then, we come to application problems. My guess is that if American Airlines, etc. had tried to match Southwest's early fares in Texas (Greenwald's recommendation) they would have been found guilty of predatory practices under anti-trust laws, and severely hurt themselves economically in any case.

Greenwald comments negatively at length on Wal-Mart's decision to go national, pointing out that its financial returns fell when it did so, because its competitive advantage was mostly through local saturation, and not squeezing suppliers or superior distribution, etc. However, I cannot help but believe that if Wal-Mart had remained a regional phenomena it would not have the supplier leverage it has (Greenwald's financial review of this topic was overly superficial, at best); regardless, it would have been bought by a larger competitor (eg. K-Mart, Sears) and then probably atrophied in an alien management climate. Further, it probably would not earned sufficient funds to develop its computerized management systems for store replenishment and inventory control.

In Wal-Mart's case Greenwald forgot a basic rule of economics - maximum profits are reached by expanding until marginal revenues meet marginal costs. In addition, my understanding of the stock market is that maximum share price is attained through strong, steady profit growth (even if incurred at declining rates).

Other analyses within the book can be similarly attacked. My conclusion is that strategic planning is MORE complicated than Greenwald tries to make it out to be. Nonetheless, his book does provide useful background.
3 of 3 people found the following review helpful
HASH(0x9689dc84) out of 5 stars The 80/20 principle applied to business analysis 16 April 2014
By brendan - Published on Amazon.com
Format: Kindle Edition Verified Purchase
Carefully read the first half of this book a couple times and you can expect to deeply internalize the most general, enduring principles of analyzing competitive advantage and entry barriers.

This book's value is its simplicity. There's nothing groundbreaking here. Greenwald's got no axe to grind, no TED-talk tailored concept to (over) sell. The ratio of insight to fluff is very high, so you'll actually remember what you read.

Non-practitioner's won't grasp how valuable a simple, deeply internalized analysis framework is. Researching a company you know nothing about- cracking open a fresh 10-K - can be overwhelming. A simple framework focuses your attention, let's you filter out the noise, and zoom in on the pertinent.

Porter's five forces isn't wrong, it's just excessive and distracting. Sure, it's nice for an MBA assignment: go analyze company X on these five dimensions. But if the lesson learned is that equal effort should be expended analyzing "supplier power" as "entry barriers", then the student has been deceived.

Scholars love excessive complication. I recall the corporate finance section of the CFA exam, wherein project go/no-go decisions depend on said project's stock market Beta, with calculations carried out to the decimal point. All this "rigor" for calculating project discount rates despite the empirical fact that Beta doesn't work. It's not just slightly wrong. It gets the *sign* of the covariance-return relationship wrong. Amazing.

My point is that Greenwald runs counter this tendency. He cuts away the baloney, ignores the auxiliary, and solidifies the foundation of competitive analysis.

*The second half of the book, which deals with strategic interaction, isn't vital. It feels like Greenwald threw it in because his publisher wanted a longer book.
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