five deadly sins Essay examples

5 DEADLY SINS OF BUSINESS: Peter Drucker’s writings on five deadly business sins are more than 20 years old, yet it is striking how relevant they still seem applied to a present days’ business. As Drucker points out, “even the mightiest company is in trouble if it has not worked on the future.” The important point to be noted from Drucker’s writings is “The starting point is to recognize that change is not a threat, but an opportunity.” But if we notice these five sins of business, they took their birth because of the careful observation of failures of some business companies. So for every failure there will be reason underlying which made the whole thing as a failure. It’s very important to identify the reason for failure and to correct it in a proper way. The circumstances play a major role in framing those sins. Circumstances may not be same every time. Let’s consider each sin one by one The first sin is “Worship of high profit margin and of premium pricing”. every for profit organization is aimed at profits and there is nothing wrong in expecting high profit margin but there are some guidelines on which your expectations should be based on. It’s really meaningless to expect a high profit on a product which does not meet the customer needs. So customer satisfaction is the most important point to be kept in mind before expecting a high profit margin. This mistake is done by Xerox by adding the features one after another but the consumers didn’t appreciate it as they didn’t find it very useful. By neglecting the customer satisfaction point Xerox did a mistake and thereby committed a sin of worshipping high profit margin. But if we consider the example of Apple which is the most profitable company, it also aims at high profits but it won’t neglect the customer satisfaction point and thereby enhancing its survival. Apple is famous for creative innovations and it also adds features frequently but it is very particular about the time gap from one feature to the addition of new feature. Apple follows some basic guidelines in aiming at high profit margin which helps it to overcome the failure.

Coming to the second sin “Mispricing a new product by charging what the market will bear”, I feel this can be applied to any business at anytime because the competitor finds a way to gain market by decreasing the price which is still profitable for the company. I feel this second sin as a reason for the failure due to the first sin. This may be profitable to the company only for the shot run but not for the long run as the competitor will be continuous effort to grab the opportunity. So I feel Drucker is right in this point as it applies to any business at any time.

The third sin is “Cost-driven Pricing”. I don’t agree with this just by reading the failures of some companies because many profitable companies are in top position because of cost-driven pricing. No business will sell its product or service with the cost less than the manufacturing cost which will be definite loss. Every for-profit organization tries to recover their costs and make a profit. Of course customers do not see it as their job to ensure manufacturers a profit but at the same time these organizations too don’t see just to satisfy the customer irrespective of their profits. But according to me I feel value-based pricing is more preferable than cost based pricing.

The fourth sin is “Slaughtering tomorrow’s opportunity on the altar of yesterday”. I would like to agree with this point because the circumstances change from one point of time to other. So utilizing the future opportunity based on the past fruitful results is ridiculous. The change in circumstances should be kept in mind before following the past implementations. This may lead into success sometimes and failure sometimes but it is

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