Below are notes I've taken while reading the book. This is not a comprehensive summary but thoughts and ideas I've found valuable. I recommend reading these notes after you've read the book first to compare our thoughts. I can't stop you if you don't want to so I guess you can use the below as an idea of what you may get out of the book yourself if you read it... though if it ain't clear it's cause you didn't listen to me. 

Definition of barrier to entry vs. competitive advantage -> Are they truly different things?

Would think a barrier acts to stop new players from coming in but a competitive advantage would act as a method for the incumbent to retain its high ROIC/profitability in the industry it has a barrier in. SO, barrier blocks entrants then comp adv keeps incumbents at bay

Local + specific comp adv => Naver, Topdanmark

Prediction: world goes more global -> service industries become more important and manufacturing less so. Rationale: Services are consumed locally whereas manufacturing can be globalized for lower cost

3 kinds of comp adv: supply (cheap irrelevant of size), demand (unique/better), economies of scale (cheaper on fixed basis)

List of competitors not short + manageable = no genuine barrier

"Barriers to entry, not differentiation by itself, that creates strategic opportunities" -> differentiation alone becomes a commodity i.e. Richemont --> brands are commodities but the barrier is watch making activity itself?

Differentiated products are harder than pure commodities to find operational efficiency in. 1) commodity -> efficiency in controlling production cost only 2) differentiated -> efficiency in production cost + successful marketing

High barriers to exit impair profitability of industry and those even with comp adv

Rule of thumb: "If last firm in always has advantage, there are, by definition, no barriers to entry and no sustainable excess returns"

Customer captivity + economies of scale = strongest competitive adv

Technology cost savings (i.e. ERP) would be short term and eventually get competed away -> unless they have scale to protect it but with supply adv alone I see it as being hard

Low cost inputs are only advantage when you stay within the localized zone where that is applicable

Customer captivity: 1) habit -> preferred -> frequent + virtually automatic purchase -> value prop is that customers like the product 2) switching cost -> the higher the customization the more pain when switching -> the longer it takes to get familiar with the more customization -> think of the sunk cost fallacy of personal time in thinking about the switching cost -> standardization leads to lower switching costs (i.e. credit card, banking, out-of-box ERPs) 3) search cost -> like switching but it is also a pain to find an alternative

Innovation is key -> once you have scale -> spread out R&D costs -> increase innovation -> virtuous cycle of increasing advantage over others

Customer captivity - unique/better economies of scale - cheaper combined is best but captivity > scale Q: Ask management what customer captivity level is

Economies of scale must be defended constantly - especially market is growing. scale results from share of existing market -> relative share size NOT overall size is what is important

Market grows -> VC increases -> not good for scale

Assessing scale: 1) compare FC/Sales between competitors 2) as market grows the sales/FC ratio will decline -> see if the difference between the competitors decrease. Decrease shows weakening of scale

Identify scale: 1) local (geography) + niche market (product) + FC is substantial

Ask management: on scale of 1-10 how painful is it for customers to switch? Ask management: Ability to increase prices

Search cost component = high added value (Microsoft) + complexity (Kerry) + significance (emotional/sentimental)

Multi-bagger scenario: market served by many small players + significant FC (i.e. real estate) i.e. Tsuruha + Couche tard

Rapid market growth -> noncaptive customer growth -> provide scale for new entrants Verdict = NOT ALWAYS GOOD

Attractive niche model = customer captivity (pricing power) + small size relative to fixed cost + no dominant competitor (market size) + extendable at edge = think local!

Mental Model: 1) Ask management: Nestle Q + historic mkt share shift (if leader changes frequent then not sustainable) 2) Analyze ROIC/CFROI over years for profitability 3) Why + how? -> niche mkt + low cost/better product 4) good management? -> capital allocation (can’t copy = unique to mgr.) + op efficiency (can be copied)

Market share change of 5% plus may show no barrier and <2% may mean barrier

Product classification: 1) Is it a luxury product people will trade up to? (Prada) 2) Is it a lower/poor product people want to upscale from? (H&M) 3) Are there global alternatives? (Korean coke)