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Professor, may I ask a quick question? In terms of the submission — it's going to be July 9th, right?

July 9th, yes. Everything needs to be submitted on Sasin. The alignment only needs to be submitted by one person in the group, as long as all the names are there. Individual assignment and the individual reflection submitted on Sasin, either as a PDF or as a Word document is fine. Maximum 3,000 words, probably about 10 pages. That doesn't count any appendix, references, AI prompts, or anything that you use, but I need those in there at the back. Understood, thank you so much.

Sure. Okay, ready to go. Those that get here early get it.

Professor, one more question regarding the exam that we took last week. Can we find the marks for that?

Jerry will come in at the break, and we'll have your papers with you. You can actually collect your own paper, have a look at it, and then return it so you can see your grade and which questions you got right and wrong. The reason we collect them back is because we need a record, but you will see your marks today. Otherwise, we'd have to send individual marks to everyone. You will get a physical mark today, you will get to see how you did. Everyone got over 50%. We had 20 out of 20. Yes, so no zeros.

What is the mean of the grades?

I cannot give you that. I don't know yet. But it's probably about 15 or so. The test was not meant to try and catch you out. It was just meant to assess your learning at the time.

Ready to go. Fifty-five people. That's about right. Let's go.

Question number one: Which of these is not a rare earth mineral? This should be easy. It should be the easiest question you have. Well done.

Next question: Which is the richest province in Thailand based on GDP per capita? Bangkok is the richest in terms of GDP in total, but per capita, Rayong has quite a small population but has a lot of industrial estates and a lot of families that own land there that has been leased out or sold to many corporates. So Rayong families are considered the richest in Thailand on average. Anyone from Rayong? No.

Okay, let's see who got that. Max. Did you know that answer? Yeah, machinery there, right? Yeah.

Third question: How many meatballs does IKEA sell globally a year? Has anyone eaten the meatballs? They sell over a million meatballs a year. It's crazy, right? If you guys are interested in the history of some of these businesses — do any of you listen to a podcast called Acquired? It's a really interesting podcast. It's by these two guys who came from Silicon Valley. I think it's called Acquired because they started off by doing M&A and acquisitions in the tech industry. But now they do really deep dives into companies. One of my favorite companies — they did two four-hour episodes on Nintendo, from its beginnings all the way through to all its performance over the years. And they do a really good one on IKEA as well. So if you're interested, look it up.

Final question: Which is the highest grossing media franchise in history? Mickey and Friends, Pokémon, Star Wars, or Marvel Cinematic Universe? MCU. Interesting, right? Pokémon by far. MCU about 30 billion because mostly it's just the movies. Mickey and Friends about 50 billion because there's merchandising, a lot of TV shows and movies and so on. Star Wars, just the movies. But Pokémon was built for merchandising. I think about $115 billion in revenue since it started. It's very impressive.

And the winner is — of the last available capybara — Max didn't make it. The winner is Pop. Where's Pop? There you go. Well done, Pop. You get a nice chubby capybara. You don't need to return these capybaras. You can keep them as a souvenir. Jerry already has the names of the winners and they will automatically get one mark put on. After I finish all the marking, they will get one extra mark on their overall score.

All right. So, the other thing I wanted you guys to do — and it seems like not everyone is here today — we need an evaluation for the course. Please do the evaluation. I will put this up during the break as well. I would like to get at least a 95% completion rate. That's all. I don't mind what you score. Although with NPS, anything under 9 or 10 is no good for me, but all I want is at least 90% completion. And most importantly, please give feedback. What was useful for you? What didn't work? What would you want more of? All of this is used to give feedback to the academic team and say what needs to change.

One of the things that I fought for this year was to make sure that strategy was the first course. Now, if you think that's the right thing, great. If you think it should have been kept till later, say so, and then we can arrange to move it. I've had this course done at various different times of the calendar year. So that would be really useful to know about how useful you found that.

Now, today we have quite a lot to cover. So I'm going to try and focus on the most important things. Today we're going to cover three things. We're going to cover competitive powers. We're going to cover business ethics, which I think EMBAs are usually more comfortable talking about than MBAs. MBAs really struggle with this idea of ethics — that there is a right thing and a wrong thing to do. Their focus is really about, well, as long as we're making money, it doesn't matter. But I think you guys have had a bit more experience, so you understand there is such a thing as business morality. So we'll talk about that in a little bit as well. And the final thing is executing strategy. If we have time, we'll do a quick review of all the basic learnings that we did today.

Any questions about what we've done? So far, we've gone through the whole idea of how do you analyze a business strategy by looking at the external environment, the industry environment, and your internal strengths and weaknesses. And we've gone into the different types of generic strategy — how you try and compete in a market, whether it's on cost or some type of differentiation. And we've looked at how, if there's too much competition, you create new markets using a blue ocean strategy, and the different ways that you can build your competitive position through mergers and acquisitions and joint ventures and vertical integration, outsourcing — that sort of thing.

All of that boils down to: how do you maintain your competitive advantage against your competitors?

Now, this section that I'm going to talk about now is based on the work of Hamilton Helmer, who used to be a Bain consultant. One of you was from Bain, right? He was a Bain consultant for about 30 years. He's now, I think, professor emeritus at MIT. Through his work on about 200 to 250 different companies in consulting, what he said was he has seen only seven ways that a company can maintain sustainable competitive advantage.

So the question for all of you and your companies is: do you have a clear strategic advantage over your competitors, one that can be maintained over time? This is the challenge, right? You may come up with a new process for building widgets and you set up a factory and you start building these widgets. And that method can be copied easily by your competitors. It is not sustainable because other people will copy it and do it.

So there are two things that you need, and we'll talk about those in a moment. What Helmer says is: not all competitive advantages are created equal. Strategy is about achieving power. And he asked the question through his analysis: why do some companies generate persistent differential returns while others struggle to maintain competitive advantage? For him, strategy is the study of the determinants of potential business value.

He says this: you need to have both a benefit — you need to have an advantage — but you also need to have a way to stop your competitors from taking that advantage and using it themselves. If they can take it, then you don't have a long-term position.

And he says there are seven distinct types. The book is not a big book and it's an interesting book, but it's quite dense and it has formulas where it doesn't need formulas. And a couple of these sustainable advantages may not be as well thought out, but it's a really nice way to start thinking about how do you maintain a sustainable competitive advantage.

He's got this strategy canvas and he says: if your business does not have at least one of these seven powers, then you lack a viable strategy and you're vulnerable. Remember, you don't have to have all of these. You just need one. You may have more than one, that's okay. But one, according to him, is essential.

If we look at the five different generic strategies — that is, what is your strategy — his powers tell you, why does it work sustainably? Why is it useful for you to maintain a competitive advantage? And you can map these things together. There are seven of these powers. I'll talk about each of them in turn. But some of them are useful for some types of strategies, some of them are more useful for other types of strategies. Some of them really define themselves, like scale economies and process power. Having good processes, efficient processes, and having scale economies can help you with costs significantly. That doesn't mean you can't have those on the differentiation side, but they are essential for maintaining advantage on the cost side.

So this is his canvas and we'll talk about each of these.

Every power has two components. First: benefits to the holder. What advantage do you have? Do you have an IP? Do you have a process? Do you have a certain business model? And second: what is the barrier to challengers? What stops them from either wanting to compete or being able to compete?

Benefits are the direct value creation to the company. These are cost benefits or volume benefits — how do you do something better or cheaper or more of? And the barriers are the obstacles preventing competitor response. It's interesting to note: some of these barriers mean that competitors cannot effectively compete. Some of them mean that competitors choose not to compete because it would cause them too much cost or too many problems, or it would be too complex for them to compete. Or there's something else that's stopping them.

The maturity cycle is also relevant. Origination tells you that these sorts of powers are most useful as the company is starting and trying to build its business model and get into the market. Takeoff means that this power is most useful in the high growth phase of a business — when a business is growing rapidly. And stability is when it is most useful or most available to you when your company is mature and has been around for a while.

Let's talk about each of these individually. Cornered resource: preferential access at attractive terms to a coveted asset that can independently enhance value. That really means you have something that nobody else is allowed to take by law. So you own a mine.

De Beers is the example that we use here. You own all the diamond mines available. And when someone opens up a diamond mine, what do you do? You buy all their diamonds. So legally you control that whole market. De Beers consolidated the mines, established a monopoly, created the central selling organization, had strategic stockpiling. When Russia tried to flood the market and export all the diamonds, they had influential marketing campaigns. They used this to regulate the release of diamonds into the market, which allowed them to maintain the price by saying, if you want diamonds, this is what you pay. That's the price for diamonds.

These days that's mostly gone, but they've managed to create a certain standard for pricing that hasn't really gone down. Diamonds should be much cheaper now than they were 30 years ago because they're not as rare as De Beers pretended they were. And there are also lots of industrial diamonds. But they've managed to create this feeling that natural diamonds are better. It started out in the old days that the most valuable diamonds were the flawless diamonds. Now the argument of the jewelry industry is, oh, diamonds are too perfect — if they don't have any flaws, they're not natural. But how many of you would want an industrial diamond on your engagement ring? Anyone? You don't mind? Industrial diamond. Anyone else? I'll switch to other gemstones like emeralds and sapphire rather than get an industrial diamond and try passing the whole thing off as natural. So they've created this idea that natural is better. They've done a really good job.

Now, is there a company in Thailand that may have that? I think about Bangkok Airways. What is its cornered resource? It owns the airport. It owns the airport and therefore owns the means of getting to that island conveniently. Yes, you can take a car and a ferry and get there, but that means how far do you have to drive from Bangkok to get there and take the ferry? They have managed to use this to basically monopolize tourism in Samui. And they've also opened up other airports now as well — in Trat, which you would use to get to Koh Chang, and a few other places. So they have built up a really cornered resource that nobody else can take from them.

First privately owned public airport in Thailand. Should airports in Thailand be privately owned? Who knows? Are there laws in other countries that don't allow airports to be privately owned? I'm sure most countries have small private airports. This one is not a huge airport, but it's just in such a great place that nobody can fight them.

Scale economies: a business in which per unit costs decline as production volumes increase. Generally in industries where there's a high fixed cost, you can spread it over more and more units, which lowers your per unit cost. You can do it through manufacturing or purchasing or specialization or learning effects.

Think about the clinic that was in the textbook — the one for diabetic medicine. Because they were focused only on diabetic medicine and only on diabetic patients, more diabetic patients came to them, which meant they could buy more insulin in more bulk, which allowed them to lower their costs even more. Therefore it became unviable for other people to really compete with them in this area, because for any other clinic, they wouldn't get the price for insulin that that clinic would — they were buying significantly more. So they had volume purchasing. And also because they specialized, they had cost reductions from accumulated experience. If you think about a purely diabetic clinic, you need fewer doctors because the nurses can be trained up far more for that specific illness. So your learning effects reduce your costs and therefore you get a market advantage.

Think about Marvel. What is the thing that Marvel has in volume, in scale? IP. IP of characters. They have something like 18,000 characters. They started in the '30s as Timely Comics — has a very interesting history, not always a good history, but a very interesting history. They built an extensive character library through the sixties and continuously. This was in the comics industry. They licensed these characters in the nineties to build recognition and test market appeal. And then by the 2000s, the Disney acquisition — in the late nineties, Marvel was almost bankrupt. And they decided to refocus.

In the late nineties, they had already licensed out their most famous IPs. Spider-Man was their most famous one — still licensed out. They still need to get permission from Sony to use Spider-Man in their movies. And Sony wants to do their own movies for Spider-Man as well, which becomes a problem. X-Men, which was one of their biggest selling comics, which had dozens of different titles — X-Men, X-Force, X-Cube — they licensed that out to Fox. So they didn't have that. Then they licensed out Hulk to Universal. These were their most famous names because DC had all the really famous superheroes — Superman, Batman, Wonder Woman. Those were the three DC ones. But Marvel had Hulk and Spider-Man and X-Men, and they had licensed them out.

So when they decided to start going it on their own, they said licensed characters to build recognition and test market appeal. But actually they realized in the nineties that licensing these characters out did not really bring as much revenue or benefit to Marvel as possible. They made almost no money from licensing them out because they licensed them at such a low rate. And the movies themselves didn't do that well — X-Men did okay, but the Hulk movies didn't do well. The Spider-Man movies did okay, but compare how the Spider-Man and X-Men movies of the nineties did compared to MCU.

The reason for this — does anyone know why? Because MCU didn't have the famous characters. So they used their second-tier heroes. Before the Marvel Universe came out, unless you were a real comic books fan, you wouldn't know that Thor was a superhero, or Iron Man. Iron Man was really secondary. Captain America by the seventies wasn't really that big because he was this real patriot. So all of these characters were not that well known. What do you think allowed them to do better than the movies that they had licensed out?

Better quality directors? Sure. But the one thing that was really different — because they had access to all the same directors — the one thing that was really different is they had the creators of these characters. They knew the stories. They understood how to tell a comic book story in both the comic book and in a movie way. So their IP wasn't just the characters that they had. It was their ability to tell stories. That was their real power. And they could translate that far better into movies than Universal and Fox and everyone. But now it's all — Disney has bought all of them. Disney bought Fox, Disney bought Marvel. I think the only one outstanding is still Spider-Man and Hulk, which is why you haven't seen a Hulk independent movie.

So they created unprecedented scale. They leveraged them across film, TV, streaming, and merchandise. They had content production and they did it over multiple films. It was only in the late nineties that they created their own studio. And then, from almost bankruptcy, I think 12 years later, they were bought by Disney for $4 billion. Not a bad amount of money.

Because they own all of these characters and the historical storylines, their campaigns can market multiple movies. Do you guys enjoy the MCU movies? If you've watched all the MCU movies, which was your least favorite? I used to have a least favorite that when I watched the second time became my favorite. This was Avengers: Age of Ultron. It did the worst in terms of revenue when it came out. But the reason it didn't do so well, and the reason I like it more now, is because after watching the whole story and you go back, you realize there were so many things that they put into that movie that were telling you what was going to happen over the next 10 movies. It was really interesting. They built all of that in because they had a story that was built for 16 films over 10 years. From, I think, 2008 when the first Iron Man came out, all the way through to about 2016 when Avengers: Endgame came out, they had a very clear storyline which none of the studios that had licensed their products was able to produce because they didn't understand. If you follow comics, if you ever bought comics, you will see there are cross storylines going from one comic book character to another. There are things that change over time that they have to explain and retrofit — really interesting. And they had real talent in this area.

Scale economies in Thailand: PTT. They established as a state petroleum company. Having government backup is obviously really useful. What that's allowed them to do is to become the largest petrol station owner in the country. The next one is probably about 50% the size of PTT. Bangchak is about 30 to 40% the size in terms of number of stations. PT is about that, maybe a little bit bigger in different areas. Scale economies — having large scale allows you to keep your competitors at bay and allows you sometimes to have even a monopoly. If you look at 7-Eleven — how many 7-Elevens in Thailand? Did I ask that in the Kahoot? Actually, which country has the most 7-Elevens? Japan.

Thailand.

Switching costs: the direct monetary cost of changing suppliers. Sometimes it costs you money to end a contract and to move. There are procedural switching costs — you may need to learn to do something differently. Think about moving from an iPhone to a Samsung, or from a Windows computer to an Apple computer. You've got to learn to do things differently and that takes effort. Relational switching costs: loss of personal relationships and familiarity. If you manage a sales relationship with a customer and for them to move to someone else, they have to get to know that new salesperson as well. Learning switching costs, data integration costs, and so on.

Look at SAP. How many of your companies use SAP? Anyone? A couple of you. How difficult would it be for you to move from SAP to a different system?

Actually, our company used Oracle first and then we migrated to SAP. Then we moved to another company, then SAP moved to Oracle. Then we were acquired by another company and we had to change back to SAP again. So I have two experiences — SAP to Oracle, Oracle back to SAP.

And how easy is it to make that decision? It's really tough. Every time we migrated, there are a lot of processes you have to redesign again. So if you can create a product or a service that makes it difficult for people to leave, you can, like SAP, provide really bad service and people will still stay because they really don't feel like they have a choice. And it's not just SAP. Most of these companies that use switching costs — it's so difficult for you to move from them that they don't need to bother too much once they've got you on. So they spend a lot of money on marketing and first use and implementation, but very little on maintenance of relationships. That's the bad side of it. But if you are that company, then once you've got your client, they're locked in. They can't move out. Even if you move from Oracle to SAP, even if it's possible to do, it's very likely that you will lose data. It won't be in the same format. You won't be able to use it in the same way. And your business processes can be significantly affected.

Think about Kasikorn Bank from a business perspective. Because they have so many different products and services, it's usually much easier for you to stay and have all your products. If you have a personal banking account with Kasikorn, you then do K-Biz and then you do everything else. You have investments in there and so on. And they manage to integrate all of these things pretty well, which is what makes them the biggest bank here. However, a lot of the banks use this now. Any of you who have had multiple jobs in Thailand will probably have multiple bank accounts. I had to open an SCB account when I joined here because they couldn't pay me in my Kasikorn account. So strange. But that's because their payroll is on SCB. So you have to have an SCB account. The strangest thing I've seen. But it seems to work very well for the banks to maintain their customers and spread their tentacles throughout.

Network economies: a business in which the value realized by a customer increases as the installed base increases. Direct network effects like Facebook — the more people that you know on there, the more valuable it is for you. Indirect networks: value increases through complementary products and services. Data networks: the more data you have, the more effective you can be. Social network effects from the connections and the status like LinkedIn. Platform network effects facilitate connections between different user groups. If you think about Airbnb — Airbnb only becomes useful when there's lots of different choices for customers to have. But it is only when you have lots of customers that your houses want to be shown on there to get access to those customers. So those network effects work on both sides of the platform.

TikTok: they started in 2016 with ByteDance, acquired Musical.ly, grew exponentially, reached a billion users, and built a comprehensive creator economy. What was really interesting — I think I mentioned this before — is that TikTok didn't use the same approach that Instagram and Facebook used in terms of promoting content and promoting creators to people that they were connected to. What they did was they looked at what was happening across their database and highlighted the things that were getting a little bit of traction to create more traction, which meant that if you could create a little bubble in your viewership, you could then become viral. This allowed for a different type of creator economy than the other systems. The network size enabled content reach for massive audiences.

How many of you use TikTok on a regular basis? Anyone here? One? Pin, only you. It's interesting. Ross, who's coming to do a talk on Wednesday here on AI's effect on HR and people — he learns all his AI stuff — he's older than me — and he learns all his AI stuff on TikTok. So the world has changed. I assume most of you still use Facebook a little bit. See, the last generation that's using Facebook — it's disappearing. So what do you guys use for social media? Instagram?

I use YouTube. To read comments. I get my social from reading YouTube comments.

But do you communicate with people on those comments? Because I don't post on Facebook either, so I get the same experience.

If you're not following social media, that's one thing. But if you're following social media, there are generational apps that are being used. I would encourage you — I still occasionally try and use TikTok, I'm not very good at it — but I would encourage you to think about how might you use it for your business, if you are trying to do any marketing.

Network economies — if you think about Grab. They started as a taxi booking app in Singapore. Then they entered the Thai market trying to compete with the taxis. But then they incorporated the taxis. And then they went to food delivery. Their network — when they started the taxi business — allowed them to leverage that data to move into ride sharing and into food delivery, and now into finance and so on.

How many of you use GrabPay? No? Interesting. I've never used GrabPay. What do you use for paying — your bank app or for scanning and stuff?

True Money. True is taking a lot of that market, right? And what is True? It's a telecommunications company that has moved into financial services, using the data that it has from its telecoms customers. So you can move from one industry to another depending on the data that you have and the networks that you can use.

Process power: that is embedded company and organization activity. These are not just things that you have. These are things that you can do better than everyone else. And these take time — organizational capabilities, operational processes, cultural elements, and so on. Hard to codify expertise.

If you look at TSMC: 1987 it was founded. But by the 2020s, it became the sole producer of the most advanced semiconductor nodes. Whatever the American government says about onshoring their chip manufacturing — yes, they've invested and they've started building factories, but it will take five to ten years to have any of this of any significance in the U.S. One of the things that allowed them to do this was that they decided early on that they are going to be what they call a pure play foundry, which means we only produce chips. We don't design them. We don't sell them onto consumers or anything. We take the designs that our customers create and we manufacture them better than anybody else, which means that now, as we heard, they have 60% of the chip manufacturing in the world, and 25% of their revenue comes from Apple's chips. Apple went vertically integrated backwards and started designing its own chips, but it doesn't produce its own chips. It doesn't have a factory — it produces them with TSMC.

And on top of that, they have 94% of the market of three-nanometer and five-nanometer chips. And even China and the U.S. will take years to catch up. And by that time, TSMC is probably going to be ahead already.

If you think about SCG — they have multiple different businesses, but they have integrated these pretty well and they have started creating subsidiaries doing all sorts of other things. But their process of integrated coordination between cement, chemicals, and building materials means that they are one of the biggest players in the construction industry in Thailand. Ownership obviously helps, but it has managed to leverage that into processes that can be used effectively across the board. In fact, when I was president of the South African Thai Chamber of Commerce, they were trying to talk to me about selling particle board for walls that was infused with some sort of mosquito repellent, which I'd never heard of before. The walls themselves chase mosquitoes away. Interesting stuff. So they're doing all sorts of things and there are these handy capabilities. And in fact, they have an innovation center that you can go and visit. So they have implemented a whole innovation cycle process and they've built up sustainability and so on, because cement is not the most sustainable product to be produced. It produces a lot of greenhouse gases and pollution.

Branding: hysteresis is the dependence of a state on its history. Affective valence — the positive emotional associations that consumers develop towards a brand — and uncertainty reduction. A brand that serves as a reliable indicator of quality means you don't have to think too much about what you buy because you know that the brand represents a certain level of quality.

Hermes, we've spoken about: founded as a saddle and harness maker, expanded into leather goods, introduced the Kelly bag, the silk scarves, scarcity and waiting lists. In fact, I just learned that Ferrari also has this idea of waiting. You cannot just buy any Ferrari you want. Just like Hermes, you have to buy the base model first. You have to build up a relationship with them before you buy any other cars that you really want. And as part of the deal, you are not allowed to criticize Ferrari. If you buy a Ferrari, you are not allowed to criticize them. And if you do while owning a Ferrari, they will sue you, which they have done in the past. So yes, heritage storytelling — all of this stuff takes a long time to build up.

The only equivalent I can really think of in Thailand is Jim Thompson, and at a much smaller scale. If you think about Jim Thompson — in the '50s and '60s, it was this idea of trying to bring back this traditional handwoven idea of the silk industry. And they use all sorts of traditional methodologies. They train craftspeople because it's a dying trade. And now they've diversified into hospitality, cafes, and so on.

But interestingly enough, Hermes and Jim Thompson both do silk scarves. Jim Thompson promotes itself on the idea that it uses traditional methods, traditional Thai methods of silk dying and silk production. And it uses traditional Thai designs that it sources and keeps in a library and archive. Whereas Hermes — I don't know if you've ever watched it — I think it takes something like 15 different screens done by hand for each silk scarf, which is really interesting that they still do the screen printing by hand. And to get it exact with 15 different colors is not easy.

Counter positioning: a newcomer adopts a new superior business model which the incumbent does not mimic due to anticipated damage to their business. So, business model innovation. Copying the new model would cannibalize an existing profitable business.

As we spoke about with Kodak: you look back and you think, oh, they should have done something. But the logical thing at the time was to spend all your money on the highest profit business unit. Why spend money on something that you're not certain about? So generally it is only the people who don't have anything to lose — the newcomers — that will focus on this new model, or the people that don't have the resources and revenue to position themselves in the standard way.

Nintendo: in the 2000s, Sony and PlayStation competed on cutting edge graphics and processing power. Nintendo DS launched with dual screens. The Wii introduced motion controls. But the most interesting thing is their strategy. They deliberately chose mature, inexpensive technology to enable innovative gameplay. They said we don't need the latest chips. Because we can use these old chips and be creative enough to create fun gameplay. We are not going to compete with the cutting edge graphics that the games on Microsoft and Sony have, which require expensive latest technology. Using older technology allowed them to lower their hardware costs, which made their console sales profitable. They concentrated on gameplay innovation rather than technical specifications. And what that meant was that not only did they create a new market for gaming — older people, children, and so on — what they did was they created a business approach that Sony and PlayStation could not follow without losing customers, and therefore could not compete effectively.

Why? Well, if I am Sony and I'm selling my PlayStation, and all my marketing says the best graphics, cutting edge, high speed, high frame rate, all of these things — and then I say, oh, but we've also got these games that are cheaper and not so fancy — it goes against their whole approach. And also may upset their current customers. Why is Sony spending money doing this rubbish? Because that's not what we want. So for them to try and compete with Nintendo would have meant them cannibalizing their own current market. So they couldn't — which allowed Nintendo to take over the whole segment of the market that hadn't been served before.

AirAsia: Tony Fernandes acquired it — I didn't realize it was not even that long ago. AirAsia is 2001. Now it used to be only Southeast Asia. Now you can fly to Australia, I think you can fly to Europe on AirAsia as well. I'm not sure I would want to do that, but I think at least it's available.

So, like low cost airlines, the counter positioning of low cost airlines generally — AirAsia, Ryanair, and so on — was: we are not going to sell a full service product of food and service and nice seating like all the other current traditional airlines do. We're going to say we are going to be a bus of the air. If you want anything else, you pay for it. But if you just want to get from A to B, then come to us and you'll pay half the price that you pay for Thai Airways or British Airways or whatever. These days, the prices are not that different. But they are still lower enough for the low cost airlines to maintain their profitability and their business model against the standard airlines like Thai Airways and Singapore Airlines and so on.

And how do they do that? Again, by process. High aircraft utilization. AirAsia, just like Southwest Airlines and Ryanair — one type of aircraft. I think they use the A320 for most of their flights. So they don't need lots of different types of mechanics for Boeing and Airbus. They don't need different types of processes for different aircraft. I mean, my wife is cabin crew for Swiss — what used to be Swiss Air, now Swiss International since it went bankrupt in the early 2000s and was bought over by Lufthansa. But she was trained — the flights used to be from Bangkok to Zurich on an Airbus, I think A340 or something like that. And so she was trained to work in that cabin and what to do and everything. And so she could fly that same aircraft to different routes like Johannesburg and Tel Aviv. Now they use a Boeing 777 and she's had to learn that. And now she can't work on the Airbus anymore because she's not been trained to do that. And that flight doesn't come this way. So you have to have different training for even different models of the same airline.

What I would like you to do is just at your tables, take five minutes to have a discussion about your companies and ask: do you have any of these powers? Do you have a sustainable competitive advantage over your competitors? I'll put this up. The seven powers. Does your company have any one of these? Five minutes and I'd like to know from you — yes or no for your company. Do you have something that your company has that cannot be copied by your competitors effectively, without them having a problem financially or market-wise or cost-wise or something? Five minutes. Just have a chat. You don't need to be in your groups. Just at your tables.

Does this make sense that these things are powers because they have a benefit and a barrier? So when you're thinking about this, think about: does my company have a barrier against other people trying to copy me? You're discussing your personal company that you're doing your assignment on.

Any thoughts? How many of you — raise your hand if your company, and I asked you about the company that you work for or your family company — raise your hand if you have a very clear competitive power. One, two, three, four, five, six, seven, eight. So not many. Less than 20% of you feel you have one of these competitive powers.

Who would like to share what their competitive power is? The ones that raised their hands. Sherman, go ahead.

So I think my company — it's a printing company. We do the packaging for cosmetics, especially for high-end global brands like P&G, Unilever, or international brands. So I think mine should be process power because in terms of printing, a lot of people are thinking about magazines or something that you just throw away. But for cosmetics or for medical industries, the packaging plays a very big part — it's something that you see first. So we have to pay attention to quality, high quality materials, and stuff like that. We pay a lot of attention in the process. So it's very hard for competitors to actually do what we're doing right now. And it's something that we've positioned ourselves into — I wouldn't say niche market, but it's something that competitors find quite hard to do. So I think it's process power.

Is that based on technology that you have, or is it about your own knowledge about doing these things?

Both. Number one is machines — of course very important, we specialize on that. But especially the people — the ones who are running the machines and also the knowledge that only we have. Machinery people can buy, right? Process power is very much in people — something that is very different from others. Do you have high retention in your staff?

Great. Thank you. Anyone else?

I would like to share. Actually, my company doesn't have a very clear competitive power, because my company started very recently — about seven years ago. But my group company, they own the banks, and the bank is the largest and the strongest in the region. So we are thinking to leverage the bank network to create network economies. And then the brand — the bank already has a very good reputation, branding, all those things. But we don't have the right competitive power; we leverage within the group companies.

So if the group has it, you can leverage it, right? And build that. But then you will need to make sure that you build that for yourself with your own company. That is an exclusive agreement with the group company. So there are many ways that you can get this. But can you see how, if you have an advantage that people can copy, the advantage will not last long? So you need to make sure that you have something that prevents people from copying you easily. And that can be done in just about any industry, but there are different ways to do it. Either you build a process or you have a process or a culture that's very difficult to copy.

Think about Toyota's process culture. I think I mentioned the JV with GM — not Ford — in the U.S. They built a company called New United Motors or something — NUMMI. And they worked with GM to produce cars in the U.S. They introduced all their Toyota processes. And in fact, it was a factory that GM had just about closed down, and Toyota hired back the exact same people that GM had let go and trained them into Toyota processes. And this factory became one of the most productive factories in the U.S. for automotives. But then when GM closed down the factory again — I think they were on the verge of bankruptcy — they could not transfer that knowledge to any of their other factories because what they took with them was the tools and not the mindset. So yes, you could do Kanban and have a card that tells you when something is finished and send it. But if you don't have the mindset of "I feel accountable for my piece of work," then it doesn't work at all. And that's what made it fail. So that was a process power that Toyota had.

Does anyone feel like they have a brand that is quite powerful? No?

Langham, right? Langham is a very well-known brand for a very specific type of hotel.

At my ex-startup, we used to have a tutoring app. Even though we dominate about 50% of the market, over time the brand is declining every year. So we seem to lose market — I think one or two percent every year.

What do you think happened? The brand had to be diversified — it dilutes the strength of the brand in its own specific areas. And that's a choice that management makes. Do you want to increase revenue by diversifying or do you want to increase margin by staying in a certain area? These are the questions that you would need to ask yourselves.

So that's really it that I wanted to share with you about these competitive positions. But I hope that gives you enough of an idea to think about how do you create some sort of position for your business that other people cannot really take over.

Before our break, I think we can get started on business ethics. Any questions about competitive positioning? Because if only — less than 20% of you — have one, this is something you need to think about. You really need to think about how do I build my competitive strength and which one of these can I do? Because that's what's needed for long-term success for your business.

Now, all of these strategic decisions depend on your judgment. So how do you know if you have good judgment or not? Raise your hand if you think you have good judgment. Should be everyone, right? Everyone thinks they have good judgment. But that's a standard cognitive bias. If I were to ask you, how many of you think you are above average drivers? Everyone would say yes, right? But it cannot be true because at least half of you have to be below average. Even if I asked you, how many of you are above average in this room? Most of you would say yes. So how do you know whether your judgment is right or wrong, or good or bad?

So ethics is about this idea of how do you understand the principles of right or wrong. In the book, they will tell you that these are business ethics and so on. I'm not really going to go into a lot of detail on that. I will share some of the things that the textbook says about universalism versus relativism and so on. But I think what I really want to get from this idea of ethics is: how do you know whether you are doing the right thing? And secondly, if you have a choice between knowingly doing the right thing and knowingly doing the wrong thing, what would you do?

Everybody would say, oh, of course I do the right thing. That's what we all say. But is it as easy as that? Is it as easy as saying, if I am faced with a traffic fine — a policeman stops me on the highway to Chonburi and he says, oh, you are speeding. It's a 2,000 baht fine. But you know what, if you have 500 baht in your pocket right now, what would you do? What's the right thing to do?

But you're already caught, right? So what's the right thing to do in that moment? Is it to pay the policeman the 500 or is it to take the fine and pay 2,000 later? The correct answer is to take the fine. Would you agree with that or would you disagree with that? Interesting, right? People are unwilling to say what the right thing to do is because they feel that they may not do the right thing. How many of you would pay 500 and forget about it and move on? And I probably would as well. Otherwise, I have to go to court, I have to go to the police station, it takes a whole bunch of problems. Takes time. So is that the right thing? Is that the wrong thing?

My job is not to tell you what is right or wrong. You will have to decide that for yourself.

So they say these things are based on well-founded standards of right and wrong that prescribe what humans ought to do. There are many systems that prescribe to you what is right and what is wrong. And these systems are not objective. They're all subjective. Whether it's a religion that tells you, oh, these are the 10 commandments that you must follow — otherwise you're breaking the religious law — or whether it's a government that says these are the things you should do. All of these things are human-made. And you can see that, by the way — our morality changes over time. There was a time not that long ago when slavery was seen as legal and fine. Morally, it wasn't a problem. And now we look at it and we say, this was an awful thing to treat other human beings like this. And why did that change? Because our values changed over time.

So first question: is there one thing that you would say is completely unethical in any situation, one action or behavior? Anything?

Hurting someone.

Okay, so here's an example. I have a friend. There's been an earthquake. His arm is stuck between a rock and a wall. And the only way I can help him is to break his arm to get it out. Is it unethical to break his arm?

I think it's ethical to break him out.

There you go. So it's not universal. Anything else? You guys are all very flexible. The MBA class said, oh, murder — murder is bad. But then you say, well, what about in war when you kill someone to try and defend your family or whatever? It may not be considered murder legally, but morally you're killing someone.

And we'll talk about some of the relativistic moral things in business a little bit later. But I want you to start thinking about what are the things that you consider right and wrong? And where does it come from? How do you decide what is right and what is wrong? And how is it that in the business world, we have so many scandals of unethical behavior? How does that happen? Business is a legal entity — it's not a real human being that has real feelings. But somehow businesses end up being so unethical so much of the time. What is it that causes that? Because if you can understand what that is, then you can start thinking about how do you ensure that you can do the right thing.

So before we take our break, I just wanted to highlight this: the principles or beliefs that guide what you consider important and influence how you choose to act, especially when faced with difficult decisions or competing priorities.

So I'm going to ask you to do something here. These are just some examples. Write down three values that you hope will guide your career for yourself. What are the most important values for you in your career in business? Or personally, if you can't think in business, think personally, I don't mind. They don't have to be these — there are many, many different types of values.

Everyone have three? Okay. Can you rank them? Which is the most important to you out of those three?

The third most requires a little bit of self-reflection. And finally, if you could keep only one of those three that you had, which would it be? Make a choice.

So this is a perfect time for us to take a break. As you think about these things, when we come back, we will explore what your values really are — what's ethical and unethical.

Do any of you remember the oath that you took when you joined? Of course you did. You must have taken one at orientation. They tell you, we hereby swear that we will do good business, ethical, blah, blah, blah. Really? You did, right? No, but I'm sure there is an event in orientation where you actually say it out.

No, we have to sign it.

Oh, you have to sign it. I have seen people actually say it out loud at some of the orientations. Interesting. Do you remember what you signed?

No idea. I didn't even read it.

Here we go. It's like terms and conditions, right? Nobody reads all 50 pages of them. Okay. Thirty minutes. We're back at 11 and we will continue from there.

Can I ask more about the individual assignments?

Maximum 3,000 words, 10 pages. It does not include references, AI prompts, anything like that. Just 10 pages of text, diagrams, whatever you want to do. Arial, Helvetica, Times New Roman, 12 point. Up to you. Twelve point text so I can read it. Around 10 pages.

What about the class reflection? The separate personal reflection?

One page. One hundred to three hundred words, one page. And I really just want to understand what you're taking away with you from this.

Okay. So as you get back — does anyone have any questions about any of the quiz questions? Anything they were not sure about or they disagree with the answer? Hopefully not.

Okay — to have fun, right? To not be so anxious. So that's how you would define enjoyment: to not be so anxious. So for you, you would do things to try and get yourself in a situation where you are enjoying. That's what would guide your choices. Interesting. Anyone else?

For the accounting and auditing profession, actually there is an ethics code which lays out all the things that people in the profession must comply with. I think the top three that they list are integrity, objectivity, and professional competence. I think integrity is the one that is focused on most because it's about being able to explain what you have done based on the evidence that you actually did it, not just claiming that it is correct.

Okay. So integrity as a key value. Different people have different values. And the thing that I need you guys to realize about ethics and values is that it is not about good versus bad. It is not about a single choice. Usually the idea of an ethical dilemma is that we have to choose between two competing values. And we have to decide which is more important to us. Even though both may be important, sometimes we have to make a choice.

If I asked you to choose between loyalty and honesty, what would you say? Which would be of more value to you?

It depends on context.

Loyalty depends on context. Why does it depend on context?

I think because we should not apply one ethic to everything.

So if you had to choose between these two, you would say loyalty? Because if I look back at what brought me here, I think it's loyalty. My company sponsored me to join this. I've had a lot of chances in my past years — a lot of headhunters have tried to find me — but I just kept working for this company for 19 years. And that's why I have this opportunity to be here. So loyalty has actually led to the decisions that brought you here. Curiosity and also innovation is very important for me, but I think loyalty is number one.

So this is a situation — if it's context, as Ty says. You have a situation where you are working with a friend of yours. You both got the same job in the same company, you're working together. And over time you realize that while you put a lot of effort in, you do a lot of overtime, your friend is more interested in partying and having a good time. And you can see that the quality of his work isn't that great. Now your boss comes along and says, listen, I'm in the process of doing performance reviews. Give me your opinion of your friend. What would you say? Would you be honest — he's a bit of a slacker and he doesn't do such a great job? Or would you be loyal and say, oh, actually he's great, keep him?

What would you do? Loyalty — raise your hand. If you say honesty — I will be honest about my friend, my best friend that I've grown up with. One, two, three. Oh, quite a few of you. How many of you say you'd be loyal and not say anything bad about your friend? Wow. Fewer. I'm quite surprised, actually. Interesting. But can you see that there's a choice and people make it differently? There's not one that is worse or better.

How about between profit and fairness?

How much profit are we talking about? So it's all relative.

Okay, so here's an example. I am the CEO of a startup and I'm trying to do this business well. And I know that a big part of my cost is my human resources — my people, my salaries. Now I find someone who I think is really great for the job and he would fit in very well with my leadership team. And I also know that his current salary is significantly lower than the median of the industry. The median of the industry is about 200,000 a month. And I am paying most of my team about 300,000 a month. I know that he's earning 100,000. I know if I offer him 300,000, that's going to cost me, and my profitability for my company is going to be less. Now, what should I do? Should I offer him the 200, which will be a double in salary for him? Or should I offer him the 300 and make him in parity with everyone else? What do I do? What do I choose?

Let go of low performers on your current team.

Okay, so that's the alternative, right? But say everyone's performing fine on your current team, but you need this new person. What do you do?

I think if you offer fair amounts — fair to everyone — you will keep him in the long term. So it will benefit — you get profit at the end.

So the question is: what is fair? If median salary is 200, is that fair? Or is fair paying him what everyone else at his level in the company gets?

Market price. So the market price is 200, but you're paying above market to everyone else. So do you pay the new guy market or above market?

If he can perform above market, I will pay him above market as well.

But you have to decide on a salary for him before he joins and before you can measure.

Let's set the salary after three months' probation.

But you have to agree a salary with him before he comes on board. You can't say, I can't decide on your salary until after three months. Would you take a job like that? No chance.

So say you offer him 200 and he thinks, wow, great — double my salary. Of course I'll come on board. It's fair, right? Technically it's fair. Median salary. You're not underpaying him, which is fine. And he'll probably do a great job until the day he discovers what other people are being paid. He will not see it as fair, even though you saw it as fair. So think about which of these values is most important for long-term success.

Innovation versus privacy — this is something we're dealing with today, every day. How much data is a company allowed to keep of yours and use in order to innovate products to sell to you? How many of you put a physical tab on your computer camera, worried that people will use it? Because you know people can, right? The amount of times that IoT — Internet of Things — can be hacked. Your cameras in your homes can be hacked. In fact, there's a whole issue in the U.S. where I think Amazon has this Nest product, which is like a home camera security system, and police are accessing those to view the streets without permission from the individual owners. How do you decide how much privacy you need versus how much innovation you need? And how much privacy are you willing to give up?

How many of you use the voice activation — Siri on your phones or whatever? Some of you. Now, what does it mean that you can use Siri? It means that your microphone is constantly listening to you, waiting for you to say "Siri," which means it's listening to everything that you say all the time. What does that mean for privacy? And yes, you can come up with really innovative products, but what is the balance? I don't know what that is.

Growth versus sustainability. If you can make 5% more profit by reducing the quality of your materials and therefore creating more pollution in the environment, do you do that or do you not do that? Now, everyone who does CSR will say not do that, but we know that most companies do that. That's the reality. So they value growth over sustainability.

Speed versus safety. Mark Zuckerberg: move fast and break things. Sure. But what if you break society? How easy is it to get it back? So how do you decide between these two things? That's the idea of an ethical dilemma: a choice between two potentially bad outcomes. And which do you choose? Is there a correct side? Probably not. It probably is contextual. But how you decide in your context is what ethics is about.

You've all seen the trolley problem, right? Those of you that don't know — the trolley problem is a standard philosophical question: you are standing at a crossroads of a tram, and your hand is on the switch lever. The tram has lost its brakes and it's going very fast, and someone has tied five people to the tracks. If you don't do anything, the train will go past and kill those five people. You can pull the lever and shift the train to a different track where it will kill only one person. What do you do?

How many of you would pull the lever? One, two. Interesting. Far fewer hands going up slowly. Okay, raise your hands again. Yes, you would pull the lever. Still less than 50%. So the rest of you would do nothing and let the train hit the five people?

No, I will just try to find alternative solutions.

No, these are your two choices. What would you do?

I will let the train kill five, and then I will kill another one to make it fair. So you let all six die.

That's the first time I've heard that. But now the question is not so much what would you do, but why? What is your rationale? The rationale of the people who would do something is usually: well, it would save five people and only one person would die. What is the rationale for people that would do nothing? It is not your choice to make. If I don't do anything, then I'm not involved. So I cannot be held accountable for what happens, whether it's five people or one person. Whereas if I pull the lever, then I am responsible for that one person. That's usually what people would say.

So this becomes a personal choice. Is doing nothing an action or not an action? You're standing there. You have your hand on this thing. The fact that you chose to do nothing may also be considered an action. If someone gets mugged on the street, do you help them or do you avoid getting involved?

So let me ask you some quick questions about something a bit more personal before we get to the corporate stuff — business ethics. Similar to the last one about your friend's performance.

You're working as a cashier at a hardware store. You alternate with the other cashier to take the money and put it in the bank. You notice that on the weeks that the other cashier deposits the money, the money is short by a couple hundred dollars. The owner of the shop hasn't noticed. But you've noticed that it's short and you're pretty sure that he's taking money. What do you do? Do you tell the owner or do you just do nothing?

You tell. Okay. Everyone would tell.

Now, one more piece of detail. The guy is stealing the money because his wife is sick and he's not earning enough to buy the medicine for her. What do you do? Will you still tell? And he gets fired and you're okay with that.

The point is: if you don't have enough money, you shouldn't steal. Stealing is always unethical. If you need money, there are so many alternatives for you to get money.

Okay, so let's go to another standard philosophical ethical question closely related to this. A man whose wife is dying finds out he doesn't have the money to help his wife. But he finds out that there's a cure that has just been developed by a pharmaceutical company, and there are only, like, five doses and he will never get access to it. But he wants to save his wife, so he goes and he steals one of those doses to give to her. Now, that doesn't take away from the pharmaceutical company being able to manufacture more of this and make profit or whatever. But the fact remains that he went into their business and he stole this thing to give to his wife to cure her. What do you think of that theft?

Also still wrong.

I'm optimistic, but I think there is always a way to get it without stealing.

Okay, so are there mitigating circumstances that affect the choices that people make?

Here's one maybe not so close to home for everyone, but for some of you. You are friends with a couple. And your friend — the friend of the same gender as you — you see them one day. You and your partner are out for dinner and you're sitting at the bar waiting to get your table. And suddenly you see your friend — and your friend is with someone else other than their partner. And they've come for dinner and they've been taken by the host to a very nice corner of the room with a candlelit table. Very intimate. Now, you don't know what they're talking about. You can't see. You don't know exactly what's going on, but they look like they're very intimate. You can see maybe they're touching hands occasionally, something like that. Now, do you tell your other friend?

No, it's not your business.

So which value is that? Loyalty versus honesty?

I think it's because of the impact of the story — you have to investigate.

So you're going to become a detective now.

Not your business.

Okay, so this is your friend that you saw. What if instead of your friend, you saw your friend's partner in the same situation, and you're not that close to them?

You'd tell your friend — with pictures.

God, you people are all over the place. Where is your sense of ethics and values? Where is the consistency?

This is where loyalty is more important. So in both cases, it's about loyalty. The bro code.

Okay, here's one. Now, listen all the way through. It's about a family business.