In Competition Demystified, Bruce Greenwald and Judd Kahn simplify Michael Porter’s five forces framework (threat of new entrants, threat of substitutes, customer bargaining power, supplier bargaining power, industry rivalry) into a single force from which all others derive: barriers to entry. According to the authors, there are three sources of this competitive advantage:
- Supply Advantages: Lower input costs, proprietary technology, complicated processes, etc.
- Demand Advantages: Captive customers, habitual products, high switching costs, high search costs, network effects.
- Economies of Scale: High fixed costs spread across high market share.