Bigger beats better most of the time
Truly durable competitive advantages arise from the intersection of supply and demand
advantages, from the linkages of economies of scale with customer captivity.
Competitive advantages based on economies of scale are in a class by themselves. They tend to be far longer lived than the other types and therefore more valuable. The best course is to establish dominance in a local market and then expand outward from it. Economies of scale, especially in local markets, are the key to creating sustainable competitive advantages.
The appropriate strategy is to identify niche markets, understanding that not all niches are equally attractive. Ideally, it will also be readily extendable at the edges. The key is to “think local"
Source: Bruce Greenwald and Judd Kahn, “Competition Demystified”
Competitive advantages based on economies of scale are in a class by themselves. They tend to be far longer lived than the other types and therefore more valuable. The best course is to establish dominance in a local market and then expand outward from it. Economies of scale, especially in local markets, are the key to creating sustainable competitive advantages.
The appropriate strategy is to identify niche markets, understanding that not all niches are equally attractive. Ideally, it will also be readily extendable at the edges. The key is to “think local"
Source: Bruce Greenwald and Judd Kahn, “Competition Demystified”
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