Competition Demystified - By Bruce Greenwald and Judd Kahn

Thanks to Michael Porter’s groundbreaking work Competitive Strategy, published in 1980, strategic thinking increasingly has come to recognize the importance of interactions among economic actors. By concentrating on external agents and how they behave, Porter clearly moved strategic planning in the right direction. But, for many people, identifying the many factors in Porter’s complex model and figuring out how they will play off one another has proven to be frustratingly difficult.

We agree with Porter’s view that five forces — Substitutes, Suppliers, Potential Entrants, Buyers and Competitors within the Industry — can affect the competitive environment. But we do not think that those forces are of equal importance. One of them is clearly much more important than the others. It is so dominant that leaders seeking to develop and pursue winning strategies should begin by ignoring the others and focus only on it. That force is barriers to entry — the force that underlies Porter’s “Potential Entrants.”

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Book: Competition Demystified: A Radically Simplified Approach to Business Strategy

Related paper: “All Strategy Is Local”

There is also a great video lecture by Bruce Greenwald on strategy and the ideas in his book that I found in csinvesting’s Value Vault.