Founder's Journal
7 Powers: The Foundations of Business Strategy
Mar 4, 2024
Exploring the 7 Powers book on business strategy, with examples from Apple, Netflix, and others. Discussing how companies create competitive advantages and barriers to entry. Exploring switching costs, vendor lock-in, and the influence of brands on business strategies. Unleashing process power and strategic evolution with insights on Netflix's shift to streaming.
27:36
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Quick takeaways
- Scale economies lead to reduced costs and pricing power, exemplified by Netflix's shift to original content.
- Network economies drive customer value with growing user base, as seen in Facebook's expansion and user connections.
Deep dives
Scale Economies: Reduced Costs and Increased Pricing Power
Scale economies refer to businesses where per unit costs decrease as volume increases. This leads to reduced costs and enhanced pricing power for companies, allowing them to spread fixed costs across more customers. An example is Netflix transitioning to original content, which helped them control costs and offer consistent content worldwide.
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