Money and Finance
- Ed Chancellor On The Capital Cycle...
From his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15, which was released in hardcover today: Typically, capital is attracted into high-return businesses and leaves when returns fall...
- Profitability And Growth...
"For profitability, growth is a double-edged sword. It always requires additional investment, and the prospects of earning more than the cost of capital depend on the position of the firm in its industry. For companies with competitive advantages that...
- Competitive Advantages...
"There are only a few types of competitive advantage (demand, supply, and economies of scale) and two straightforward tests (market-share stability and high return on capital) to confirm their existence." -Bruce Greenwald and Judd Kahn, Competition...
- Competitive Advantages
These quotes are from the book The Investment Checklist by Michael Shearn. "Competitive advantages are less sustainable when they are affected by changes in technology or if they are in rapidly emerging industries. Changes in technology threaten...
- 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,...
Money and Finance
Bruce Greenwald and Judd Kahn on competitive advantage and Apple (circa 2005)
The book Competition Demystified is one of my must-read investment books (published in 2005). The excerpt below contains both some good information on looking for competitive advantages, but it also shows how quickly things can change—especially in the technology industry—and that it is probably wise to never use definitive phrases such as “is going nowhere” or “no chance of doing so today”.
For all of Steve Jobs’s brilliance and the elegance of Apple’s product design, it seems consigned to always push uphill against the advantages of Microsoft and Intel. In the PC industry, Apple is going nowhere.
In the approach we recommend here, the central question is whether, in the market in which the firm operates or is considering entering, competitive advantages exist. If they are present, what are they and who has them? We have described two tests for their existence: stable market shares and a high return on investment for the dominant incumbent firms. To keep the analysis manageable, our advice is to move one step at a time. Begin with one force—potential entrants/barriers to entry—not five. Start simply and add complexity later. Whenever things become confusing, step back and simplify again. Clarity is essential for strategic analysis. Finally, “think local.” Whatever historical promise existed in Apple’s strategic position lay in the segment of desktop publishing and other graphic-intensive applications. It had virtually no chance in taking on the broad PC industry, and it has no chance of doing so today.
- Ed Chancellor On The Capital Cycle...
From his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15, which was released in hardcover today: Typically, capital is attracted into high-return businesses and leaves when returns fall...
- Profitability And Growth...
"For profitability, growth is a double-edged sword. It always requires additional investment, and the prospects of earning more than the cost of capital depend on the position of the firm in its industry. For companies with competitive advantages that...
- Competitive Advantages...
"There are only a few types of competitive advantage (demand, supply, and economies of scale) and two straightforward tests (market-share stability and high return on capital) to confirm their existence." -Bruce Greenwald and Judd Kahn, Competition...
- Competitive Advantages
These quotes are from the book The Investment Checklist by Michael Shearn. "Competitive advantages are less sustainable when they are affected by changes in technology or if they are in rapidly emerging industries. Changes in technology threaten...
- 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,...