7 Powers: The Foundations of Business Strategy

A Benefit: some condition which yields material improvement in the cash flow of the Power wielder via reduced cost, enhanced pricing and/or decreased investment requirements.

In the case of Netflix, their lead in subscribers translated directly in lower content costs per subscriber for originals and exclusives.

Narrowness. To clear the high hurdle of Power, Branding in the context of Power Dynamics is a much more restricted concept than in marketing. For example, even if “brand recognition” is very high, there may not be Branding Power. In instances like this, it could actually be Scale Economies creating heightened brand awareness. For example, Coca Cola

The quality of declining unit costs with increased business size is referred to as Scale Economies.

The quality of declining unit costs with increased business size is referred to as Scale Economies. It is the first of the 7 Powers I will examine, and its conceptual lineage begins with Adam Smith’s Wealth of Nations and indeed the beginnings of Economics itself.

Strategy strategy value Strategy Dynamics Strategy Statics industry business market Description Strategy (with a Capital S) is the intellectual discipline sometimes called Strategic Management. I define it: the study of the fundamental determinants of potential business value.

The set of conditions needed for persistent differential returns. Power r

Our first public “culture deck,” released in August of 2009, identified nine highly valued behaviors. The first was “Judgment.” As we elaborated: You make wise decisions … despite ambiguity You identify root causes and get beyond treating symptoms You think strategically and can articulate what you are and are not trying to do You smartly separate

Scale Economies: Benefit: Reduced Cost Barrier: Prohibitive Costs of Share Gains

strategy: a route to continuing Power in significant markets