Competitive strategy

The previous course names the kinds of advantage a business can have. This one asks a harder question: how do you know, from a filing, that a particular company has one.

Most answers to that question are assertions. A brand is called a moat because it is famous. Scale is called a moat because the company is large. Switching costs are called a moat because leaving sounds inconvenient. None of those is a measurement, and a thesis built on one breaks without warning because nothing in it was ever checkable.

So this course does three things. It sets out the frame properly, which means using Porter's five forces to ask five questions rather than to reach a verdict, and separating a barrier to entry from merely doing something better. It measures two advantages from disclosed figures: customer captivity from a published retention rate, and pricing power from a company's own split of revenue growth into price and volume. And it deals with duration, which is the part every valuation depends on and almost nobody states.

It ends where it should: with the four recorded ways a moat ends, one of them documented in a shareholder letter written while it was happening.

You need business-models-and-moats and quality-and-returns first.

What you will be able to do

Run the five forces as a checklist and refuse to score it. Tell a barrier from an advantage and say why only one of them persists. Read captivity and pricing power out of disclosures instead of asserting them. Solve for how many years of excess return an assumption set implies. And name what would end it.