Enterpreneaural Strategies-peter Drucker

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Enterpreneaural strategiesPeter F. Drucker

enterpreneaural strategies

1- Being Fustest with the Mostest 2- Hitting them where they Ain t 3- Finding and Occupying a specialized ecological niche 4- changing the economic characteristics of a product, a market, or an industry.

Drucker s legacy

Not mutually exclusive Not always sharply differentiated Each has pre-requisites Each require specific bnehavior Each has its own limitations Each carries risk

1- Being Fustest with the Mostest strategy

The enerpreneaur aims at leadership Does not aim at creating a big business:

This strategy is unforgiving- head or tail Highly rewarding Examples:

Example:1-Hoffman- the world s largest and most profitable pharmacutical at switzerland. Aquisition of vitamins patents despite scietists doubts for its success 2-Du-pont s creation of Plastic Industry 3-3M 4- Johanson & Johanson s Pruducts at Mother care-II Swords clifton.

Example:5- LUMS, IBA 6- AGUH,

Pre-RequisitesRequires thuoght and careful analysis Requires an Ambitious aim

Extreme concentration of effort-one clear cut goal

Retain a Leadership position

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Reasech budget must be higher after the innovation Find new users Make the product obsolete before a competetor can do it-----Intel Inside Systematically Cut the price of his own prduct- e.g. Intel, e.g. Invention of dynamite and the dynamite cartel---decrease in prices day by day---increase in demand----stoping the competetors to enter.

Drawbacks of this strategy

0.5 prbability of success, a head or tail There is only success or failure It fits only in small minority of innovations, only useful for major innovations Crux-when rest of the world believe that the product wont be successful and one still stick to its production and marketing with a hope that it would get reward.

2: Hit them where they Ain t

It consists of two strategies:

Creative Imitation & Entrepreneurial Judo

i) Creative Imitation: to make improvement & have leadership position in the product and innovation already done by some one else.

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The creative innovator exploits the success of others, it does not invent a product or service but only perfects and positions it. Looks at the product from the view point of the customer. Creative imitation is not innovation it is proper positioning of the product in the market.

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E.g. IBM

Building a high-speed calculating machine for astronomical calculation in early thirties Few years later designed a computer for same purpose at Harvard. After world war-II, a real computer with memory and programming Before going public, IBM adopted the design of ENIAC- with multipurpose business applications

Crux

The creative imitation strategy waits until somebody else has established the new, but only approximately . And within a short time it satisfy the customers wants and takes the leadership position. ZAR-Aamad Scheme by HBL in early nineties.

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IBM as creative imitator with Personal Computer, which was basically the idea of Apple s but the Apple failed to understand its success although their innovation was successful. The idea of digital watch by the Swiss but taken over by Seiko-Japan by adopting semi-conductors a perfect example of creative imitation.

Pre-requisites:

It starts with the markets rather than the products and with customers rather than with producers. It requires a rapidly growing marketP.C It satisfies the demand already created rather than creating new demand.

Risks Involved in creative Imitation:

The risk of misreading the trend of the market. Risk vs Reward could be on adverse side. The Risk of being too clever:

Brief ComparisonBeing Fustest with the Mostests Ecological Niche strategy and Creative Imitation Aims at industry leadership Focuses at large industry/market These are Competitive strategies Adopters become big/visible names It aims at controlling rather than leadership Focus at monopoly in a small area Irrespective of competition The adopters remain anonymous

3- Ecological Niches

There are three Ecological Niche Strategies:i) the TOLL-GATE Strategy ii) the SPECIALITY SKILL Strategy iii) the SPECIALITY MARKET Strategy

i) The TOLL-GATE Strategy

A company is said to have a toll-gate position producing small products being used in the production process of large/core products. Its used for small markets where competition is irrelevant.

Examples:

Siddique Sons Tin plate Ltd.- Windhur Baluchistan:Making cans and containers for packaging of cooking oil, fruits, foods, vegetables, sea foods, beverages, lubricant oil and other edible stuff etc. Their products are also used in quality packaging of tea, cookies, sweets, dates, gift boxes, paints, aerosol cans, juices, beverages, dairy products, food cans, fuel & air filters and many more.

Major Clients .

Coca Cola Lipton H.o.M Nestle Sultan cooking Oil ICI Dulux Many more

e.g.02

Development of enzyme by Alcon Co. for elimination of one feature of the standard surgical operation for senile cataracts.

Requirements for toll-gate

The product has to be essential to a process. The risk of not using it- the risk of using an eye in case of Alcon Co. s Enzyme, must be greater than the cost of the product. The market be limited, small and allowing no room for the competitors.

Risks and Limitations of tollgate.

Growth is less after the niche has been occupied. The demand is dependent upon the demand of the process or product to which the toll-gate product furnishes an ingredient. It can obsolete in case an alternative emerges helping to satisfy the same end use.

ii) the SPECIALITY SKILL Strategy

Strategy is used for controlling position rather than leadership by Manufacturers of car parts for Suzuki, Indus, Nissan, Honda etc.

E.g s.

Seat Belts Seat Covers Door Rubbers Monograms/logos Ready heater Denso Air Conditioner, Delco-self starter, Bosh-electric system etc.

Requirements

To attain a specialty niche requires something new, a new market, a new industry or a new major trend It requires a skill that is unique and different Skill improvement-an ongoing activity

Limitations

No right-no left just one direction. Dependency on some one else. Specialty to cease being a specialty.

iii) the SPECIALITY MARKET Strategy

This strategy is based on specialized knowledge of a market whereas the previous strategy was based on a product or service. E.g. Travelers cheques Having same requirements and same risks involved as with the specialty skill strategy.

4- Changing Values and CharacteristicsThe strategy aims at innovation itself. The purpose is to create a customer which is the common element in these strategies, which are given as: i) By creating utility;

ii) By pricing

Continueiii) By adaptation to the customer s social and economic reality; iv) By delivering what represents true value to the customers.

i) Creating Customer Utility;

Comparison of old PAKISTAN POST Office-DAAK KHANA System with the services of TCS, OCS, Leopards etc. Why do we prefer private courier companies now? Is price matter in lieu of quality based reliable speedy service?

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Private courier companies created utility, they addressed the customer need for a postal service in professional way. No technology involved, just focus on cutomer need desired

ii) Pricing

Comparison of straight edge razor Ustra at a local Barber Shop with Gillette Blue-II Razor Comparison of Carbon Paper with Photo Copier Machine The contribution of pricing in these product s success.

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Value to customers vs cost to suppliers.

iii) By adaptation to the customer s social and economic reality;

Steam turbines vs piston driven steam engines, the former are complex, requires a high degree of engineering in their design and skill for installation. Think of installing a Molding Machine out side Karachi and consider the replacement of Die for each Plastic Item you are going to produce of this machine?

iv) By delivering what represents true value to the customers.

Think one step ahead of the strategy of accepting the customer s reality . Think again from customer s point of view, whether you need a product or you need a solution to your problem.