"7 Powers: The Foundations of Business Strategy" points out that strong and sustainably growing businesses don't rely solely on hard work or good management, but also on "powers" that create a lasting competitive advantage. The following seven areas are central to true strategy.
1. Scale Economies – The Power of Scale
As a business expands, its average unit cost decreases, allowing it to be more price-competitive and achieve higher profit margins than smaller competitors. The power of scale is therefore a crucial safeguard, because the larger a business grows, the more difficult it is for new competitors to enter the market at the same cost level
Example: CP All (7-Eleven)
With over 14,000 branches nationwide, CP ALL can negotiate lower prices with suppliers than smaller competitors. Furthermore, its efficient logistics system distributes products more efficiently, resulting in continuously decreasing average unit costs. This makes it virtually impossible for new competitors to enter the market at the same level
2. Network Effect – The Power of Networks
The value of certain types of businesses increases as the number of users grows. When many people are in the same network, the attractiveness and engagement increase, naturally drawing in new users. This allows businesses that have built strong networks to dominate the market in the long run
Example: LINE Thailand
LINE started as a chat app, but as the massive number of users spread across the same platform, the network's value multiplied. From financial services (LINE BK) and content (LINE TV) to e-commerce (LINE MAN), new users were naturally drawn in because "everyone we know is here."
3. Counter-Positioning – The Power of Going Against the Current
It involves choosing a business model that differs from the traditional market practices. Existing competitors often cannot immediately replicate this, as doing so might negatively impact their core business. This counter-trend approach creates opportunities for new businesses to gain a competitive advantage, while existing competitors remain trapped by their past successes
Example: Srisawat Money on Wheels
In the past, the lending business was perceived as difficult to access and having complicated procedures. However, Srisawat chose to launch a "loan on the main road" model that was easier and faster to access. Traditional financial institutions could not adapt immediately due to existing regulations and administrative costs, allowing Srisawat to successfully create its own market share
4. Switching Costs – The Power of Changing Minds
If switching to a competitor results in costs, wasted time, lost data, or missed opportunities for customers, they are more likely to remain with their current provider. Creating high switching costs helps businesses maintain a stable customer base, even when competitors offer lower prices or additional features
Example: SCB Easy App
As users increasingly transfer money, pay bills, and link their accounts with SCB's digital services, switching to another bank would mean spending time migrating data, setting up new accounts, and learning a new system. Therefore, customers are more likely to remain with their current bank, even if competitors offer better promotions
5. Brand Power
A strong brand is not just a name or logo, but about consistently delivering quality and reliability, so much so that customers are willing to pay a higher price because they trust what they are receiving. The power of a brand also helps businesses withstand price pressure and differentiate themselves in a highly competitive market
Example: ThaiBev (Chang)
The "Chang" brand doesn't just sell a beverage; it sells an image of fun, socializing, and celebration. This strong brand makes many consumers choose it even when cheaper options are available, because they trust the quality and the emotional connection the brand delivers
6. Cornered Resource – Power from Specific Resources
Businesses that can control or possess scarce and valuable resources, such as exclusive rights, hard-to-reach technologies, or data that cannot be obtained elsewhere, have a tremendous advantage because competitors cannot access these resources, creating a sustainable shield of protection
Example: PTT.
PTT has access to the country's energy infrastructure, such as gas pipelines and storage facilities, resources that are not easily replicated in the short term. New competitors are virtually unable to enter the market due to legal restrictions and the enormous investment required
7. Process Power
These are processes that businesses build and continuously improve until they become "intrinsic capabilities" that are difficult for competitors to imitate. Examples include work methods, management systems, or accumulated knowledge. These enable businesses to operate more efficiently and produce results that competitors cannot easily match
Example: BG Container Glass (BGC)
A major Thai glass packaging manufacturer with extensive experience in producing high-quality glass. The accumulation of knowledge, production techniques, and precise management systems results in lower unit costs, and new competitors cannot quickly replicate this expertise
summarize
"7 Power" is a framework that helps executives see that true strategy is not just about competing faster or cheaper, but about building sustainable structural strength. If organizations can create and maintain these strengths, they will not only outperform competitors today but will also be able to protect their leadership and achieve stable long-term growth
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