Competition Demystified

Competition Demystified

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Greenwald, Bruce | Kahn, Judd Portfolio, 2005
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IN THIS SUMMARY

According to Greenwald and Kahn, though most experienced businesspeople know that the two critical elements of business-competition and strategy-are associated, few understand their essential natures or the direct relationship between them. These strategists, say the authors, mistakenly believe that any plan for attracting customers or increasing margins is a strategy, especially if it's a large-scale initiative, requiring a lot of resources, a long time to expedite, and answers the question: "How can we make money?" It is endemic confusion that still exists, despite Michael Porter's groundbreaking work, Competitive Strategy (1980). Greenwald and Kahn strongly agree with Porter's view that the five forces of substitutes, suppliers, potential entrants, buyers, and competitors within an industry can affect the competitive environment. And, they maintain (strongly) that he clearly moved strategic planning in the right direction by highlighting the importance of interactions among economic players. In fact, Competition Demystified is founded on that direction. Nonetheless, they maintain that identifying the many factors in Porter's complex model ("it sacrifices clarity for completeness") has proven to be frustratingly difficult. "Attending to five forces at one time is not easy, especially if none of them has any claim to priority." Thus, what the authors offer here is an approach that, though it is simpler (radically so) than the one offered by Porter, it in no way tries to upstage or discredit him. Their goal is merely clarification via prioritization, and they more than meet that goal by concentrating first on the one force, barriers to entry (the force that underlies potential entrants), that they believe is clearly more important than the others. With this acute focus, Greenwald and Kahn create a fitting context for the practical application of Porter's other forces. It is an approach that informs their notion that, in formulating strategy, there is natural progression of perspectives that must be addressed if unrealistic strategic goals and poor business outcomes are to be avoided. Their compelling case does not, however, underestimate the importance of management. Detailed case studies of prominent companies in a wide range of industries, enhanced by sharp analysis, provide evidence that any obsession with strategy that ignores operational excellence is as ill-conceived as inappropriate strategies.