Excellent catch @brian — this is something I’ve been thinking about as well.
Originally I thought that the 7 Powers is about competitive advantage and therefore it rightfully belongs exclusively on the Demand side of the triad. But I realised, as a result of writing this week’s piece, that actually the 7 Powers and the triad model of business expertise overlap in weird ways.
Short answer: yes, Indomie’s advantage was a cornered resource (a structural cost advantage). But I feel uncomfortable putting it under the Demand leg of the triad (it has nothing to do with the market for its customers). So that leaves us with Supply vs Capital. I guess I could put it under Supply — it is an ongoing operational advantage, after all. But here’s my train of thought:
- South East Asian conglomerates tend to start new businesses by taking an existing business and squeezing some cash to redeploy into the new subsidiary / joint venture.
- Sometimes cash is hard to come by so they just skip the intermediate state and capitalise using assets.
- In this case I thought one way of looking at it was that the parent conglomerate basically capitalised Indomie with free flour.
- In the same way that you could say my hypothetical manufacturer was capitalised with free land that it could later sell / build on
Does this make sense? I guess where my analogy fails is that it continued to ‘capitalise’ Indomie with free flour on an ongoing basis, lol.
One implication of this is that the 7 Powers can be expressions of skill on all three legs of the triad.