Business policy and strategy

2. According to Thiel, competition results in mediocre performance because it sets a standard on which individuals or groups strive to achieve. An environment that favors competition operates on an idea of what it means to achieve success and this is often based on how well one outdoes the others (Hirschey, 2009). Instead of striving to reach peak performance, individuals and organizations compete to outdo each other instead. Although this creates innovation, the competitive approach focuses the innovation towards achievements that are based on what the competition has already achieved. Support for Thiel’s perspective is seen in the education and employment systems in society today (Thiel & Masters, 2014). Since careers like law and medicine are considered the most promising and rewarding, students invest their time and energy towards becoming good lawyers and doctors. They, however, neglect industries such as farming among others. Instead of striving to be the best in one field, competition drives people towards what is believed to be the most lucrative venture and this negatively affects development and innovations.

 

1. I support Theil’s statement that companies should try and become monopolies because this would allow them to specialize in one specific aspect of trade or service and thereby offer the best quality. Take the case of Con Edison as an example. The company is responsible for supplying water, electricity, and gas in the U.S. despite lacking a variety in terms of goods and services, the company has managed to block entry into its market thereby gaining complete control in the market (Lee & McKenzie, 2008). One advantage of this is that the company’s resources are spent on innovation rather than being wasted on activities aimed at beating the competition. The company can thus focus on improving the quality of its products and services and thereby better satisfying the needs of its customers. An added advantage is that the company has control over pricing as it has complete control over the market it operates in (Luo & Shenkar, 2008). The monopoly approach is therefore appropriate as it benefits both the organization as well as the target audience whose needs it set out to satisfy when started.

 

2. Thiel’s argument that companies have secrets means that different organizations keep some of the information secret to maintain a competitive advantage. It also suggests that organizations operate under policies that try to achieve an objective that has not yet been fully realized. When companies innovate, most of the developments are in a bid to either improve a product or service or replace it with a better one. Since the innovations are based on assumptions of what shape future trends will take, the full picture remains a secret to both the organization and others in its market (Thiel & Masters, 2014). Organizations keep secrets as a way of ensuring that their progress in predicting future trends remains hidden from other organizations to retain their competitive edge. Sony, for instance, is in the process of launching the Play Station 5 console. Since its an upgrade from their previous model, most of the innovations and upgrades have been kept secret, despite the company having revealed the likely release dates. Companies choose to inform the audience about the product but keep some of the information secret as a way of reducing competition (Thiel & Masters, 2014). It also has an advantage as it peaks the interest of the target audience and this positively impacts their purchase decision.

 

 

 

4. The definite optimist is characterized by the belief that the future will be better and therefore designs a plan to take advantage. An example is Apple inc which launches innovative products following a plan aimed at popularising them to the target audience.

    The indefinite optimist tends to be positive about future events but is yet to come up with a strategy to make that future a reality (Thiel & Masters, 2014). A good example is wall street where people invest their money in stock and hope that the stock will go up in value despite having no control over the stock market.

    A definite pessimist outlook can envision future trends but believes that the trends will yield negative results (Thiel & Masters, 2014). China, for instance, is said to be advancing so fast it could take over the world and this could have a negative outcome. China, however, does not share this belief and is focused on accelerating its growth regardless of the consequences.

    The indefinite pessimist has an idea of what future trends may unfold but has no plan on how to react when they occur (Price, 2014). The eurozone is a perfect example as countries are unable to recover after the undirected bureaucratic drift.

 

1. The outlook that is best suited for establishing a business startup that is likely to become a big enterprise is the definite optimist approach. The outlook focuses on the positive outcomes that are likely to occur in the future and then relies on a well-structured plan that aims to take advantage of the opportunities that will be created (Thiel & Masters, 2014). An example is an e-commerce where traders reach their customers online. With most businesses closed down due to the COVID 19 outbreak, businesses with an online presence can remain operational. Organizations can, therefore, structure their businesses such that operations can be conducted online. Since disease outbreak and other natural disasters are likely to occur in the future, establishing a strong business presence online will ensure that organizations continue supplying goods and services to their customers (Thiel & Masters, 2014). The outlook is ideal in that it teaches organizations to not only anticipate future trends but also come up with a plan to make the objectives a reality. The organizations can thus take advantage of the opportunities created and grow to become great enterprises.
2. Thiel’s framework makes sense in that it explains why some organizations perform better than others despite existing in the same market. Business operations are greatly influenced by what the organizations want to achieve through their objectives. The objectives are based on the management’s idea of what will be profitable in the future and how to go about making it available to the target audience (Hirschey, 2009). Businesses that are optimistic and base their operations on planned out strategies are likely to do better because they anticipated the outcomes and position themselves to take advantage early in advance. Those that fail to plan on the other hand are led by the pessimist outlook which either fails to inform on possible future outcomes or does not prepare organizations to benefit from the opportunities that are present in the future. There is however room for argument especially because Thiel attributes success to his framework alone (Thiel & Masters, 2014). Success is a result of more than just anticipating future trends and having a plan. There are factors such as customer loyalty and market share that influence growth that should be taken into consideration as well.

 

 

 

 

 

5. The question that businesses have to answer to launch an innovative product that is likely to take over the market is whether a unique opportunity has been identified that is yet to be discovered by others. Thiel advocates for organizations to stray from the approach of being the most competitive to one where organizations specialize in offering a specific commodity and become the best at it (Thiel & Masters, 2014). The secret question pushes organizations to venture into markets that have been ignored to identify opportunities for innovation. Unique opportunities are ideal as those that discover them gain an added advantage as they are the pioneers. This makes it easier for the startup to enjoy steady growth with little competition before other businesses enter the identified market (Thiel & Masters, 2014). The approach also makes it easier for organizations to prevent market entry by keeping their operations secret from the public eye and only delivering the products and services to satisfy the identified needs. The unique opportunities further attract customers that desire new products as they break the monotony of products already congesting the market.
6. The notable questions missing are;

    What is the nature of competition in the market?

    Does the startup have an unfair advantage?

Thiel fails to include the questions in his list because they go against his idea of organizations functioning as a monopoly. To answer the question regarding competition, the organization would be required to assess its competitive nature and come up with ways to be more competitive. Thiel, however, believes that such efforts should be directed towards innovation rather than competition (Thiel & Masters, 2014). The query regarding an unfair advantage may have been avoided because it also requires organizations to compare their performance against others. Thiel believes that organizations should strive to function as monopolies. This means specializing in a specific product or service, and them being the only company offering it to the target audience (Thiel & Masters, 2014). In such an environment, organizations do not have to worry about competition or having an unfair advantage because each organization has its products and services. As such, including the questions would have been contradicting as they go against what Thiel tries to advocate for.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Hirschey, M. (2009). Fundamentals of managerial economics. Mason, OH: South-            Western/Cengage Learning.

McKenzie, R. B., & Lee, D. R. (2008). In defense of monopoly: How market power fosters           creative production. Ann Arbor: University of Michigan Press.

Price W, (2014) “Zero to one: Peter Thiel’s view on the importance of definite optism”    retrievd from, https://www.linkedin.com/pulse/20140924171143-103827-zero-to- one-peter-thiel-s-view-on-the-importance-of-definite-optimism

Shenkar, O., & Luo, Y. (2008). International business. Thousand Oaks, Calif: Sage          Publications.

Thiel, P. A., & Masters, B. (2014). Zero to one: Notes on startups, or how to build the      future.