Why some businesses win: competitive advantage and the economics of strategy

What competitive advantage really is

Advantage means earning more on the money invested than that money costs, for many years. ROIC and the cost of capital, in plain words, with a worked example.

Scale and scope: when being bigger lowers cost

How spreading fixed costs, buying in bulk and sharing costs across products make big firms cheaper, and why that only works up to the minimum efficient scale.

Network effects: when each user makes it better

Direct, two-sided and data network effects, the economics of the loop, what it costs a rival to fight one, and the four ways network effects break.

Switching costs, lock-in and habits

Why customers stay even when a rival is cheaper: the money, time, risk and habit of leaving, with the maths of how much pricing room that gives, and how regulators cut it.

Brands, trust and pricing power

A brand is an advantage only if it lets a firm charge more, or sell more, than its costs explain. How to test pricing power with numbers, and why trust matters most when quality is hard to check.

Cost leadership or differentiation: what must be true

The two routes to a wider gap between price and cost, as numbers rather than labels: a real low-cost airline, a real low-cost oil producer, and the test of whether a premium covers its extra cost.

Moats that erode: technology, rules and new rivals

Every advantage fades. How technology shifts, regulation and new rivals wear advantages down, with real cases from the United States and Europe, and the maths of a fading advantage.

Using it in a case: is the advantage real?

Three questions that tell you whether a client's advantage is real and how long it lasts, applied to a growth decision with worked numbers.