Entrepreneurial Strategies

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In this chapter, Peter Drucker presents four different entrepreneurial strategies. He starts pointing out that entrepreneurial strategies are as important for any business as entrepreneurial management is. He states that despite this fact there is almost no discussion about entrepreneurial strategies, despite their distinctive influence to the success of any business. Drucker distinguishes between entrepreneurial management, that is, practices and policies within the enterprise, and entrepreneurial strategies, that is, practices and policies outside. "Outside the enterprise" is understood as the marketplace the firm operates in. The author proposes four specific entrepreneurial 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 The way Drucker calls these four strategies is evidently very methaphorical, almost a bit poetical, and it already gives an implicit, summed up explanation what these strategies are about. The author then goes into details and special characteristics of each of these strategies, with special focus on risks and opportunities. He supports his conclusions with a lot of examples from economic life, namely the success stories or failures of often well-known enterprises. One might easily find that the way corporations behave in the marketplace can be compared to the way animals behave in "wild" nature, as expressions like "finding an ecological niche" may suggest. Indeed, this interpretation is endorsed by the way Drucker describes the features of these strategies, sometimes, he even explicitly draws that comparison to biology. We will now have a closer look at each of the four strategies. "Being Fustest with the Mostest" As the naming suggests, this strategy is mainly defined by trying to become the unchallenged leader in an economic field. Drucker observes that this is sometimes seen as the only entrepreneurial strategy, and he states that this view is false. Indeed, he sees it not even as the dominant entrepreneurial strategy. He considers this strategy to carry the biggest risks and demanding massive resources, even though it is highly rewarding when successful. Drucker points out that "Being Fustest with the Mostest" must aim at creating something truly new, something truly different. But if one has established such a new product in the market, the strategy is far from being over. Drucker explains that the real effort behind this idea is just starting to begin. The entrepreneur now has to make sure he stays the unchallenged leader in this economic field. This requires that he has to make his product or his process obsolete before a competitor can do it. Work on the successor of the successful product has to start immediately, which means that the research budget must be higher after the original innovation has been established than before. Furthermore, the entrepreneur who has attained leadership has to be the one who systematically cuts the price of his own product or process. Otherwise, he may provide the possibility for competitors to follow up with imitated products, who could benefit from high prices.

Drucker ends by concluding that "Being Fustest with the Mostest" is much too risky and much too difficult to be used for anything than major innovations, even though it is highly rewarding when successful. Creative Imitation / "Hit them where they ain't" This strategy is somehow a consequence of the risks the "Being Fustest with the Mostest" strategy we've just considered carries. In essential, it means that one does not innovate a new product from scratch, but instead trying to exploit the potential opportunities of an innovation someone else has made, but was not able to profit from it so far. Being successful in "Creative Imitation" means that one understands better what the innovation represents than the people who actually...
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