BLUE OCEAN STRATEGY 5
Blueocean strategy is a concept which suggests that businesses should berun in an environment where there is no competition. This strategywas derived from the Harvard Business Review Press by Renee Mauborgneand W. Chan Kim. It describes the importance of establishingbusinesses in less competitive areas which can minimize situationswhere businessentities fight against each other to dominate themarket. Therefore, organizations should strive to find ways ofworking in less contested business environments (Kim et al., 2005).They should avoid the Red Ocean market places, which are thecompetitive environments.
BlueOcean Strategy also involves coming up with business mechanisms thatresult in the establishment of new markets. These are markets wherethere are high levels of innovation and creation of powerful leaps inproducts’ value for customers. This gives rise to high demand andprofit margins. The strategy is based on six-core principles whichinclude, reconstructing market boundaries, focusing on the biggerpicture instead of the numbers, going beyond the existing demand,getting right the strategic sequence, overcoming organizationalhurdles and building execution into strategy (Kim et al., 2005). Itis perfect for new business which might not have a lot of money toadvertise and establish themselves, especially where other businesseshave already built their brands.
Thereare several benefits to a business that incorporate Blue OceanStrategy in its operation. One of these is that businesses are ableto avoid the bloodied red oceans where fighting for market share isextremely high (Siegemund, 2008). The strategy compares the twooceans. The blue ocean is considered peaceful without the vicioussharks while the red one is full of blood from the fighting.Therefore, helps business people to findenvironments that favor them in terms of competition.
Thebusiness is also able to analyze different companies in an existingmarketplace through the use of . It can expose theirrelevant expenses that do not translate into high-business margins.These expenses can be eliminated if they do not bring profit to thecompany.
Inaddition, there is no competition for the market share (Siegemund,2008). Instead, the company only needs to create a new model that isunique. The focus is mostly on how to attract new customers asopposed to competing with the competitors. At the same time, it canbe applied when the business performance is low or if the market issaturated. This increases the number of customers while at the sametime making profit.
Finally, can bring together useful features from differentmarkets in order to create a single product which has advantages overthese markets. It, therefore, offers ideas of how to bridge the gap,introduce a new product and attract customers (Siegemund, 2008). Thiseliminates competition for the business.
Theapplication of can be seen in the video gamebusiness. In many markets, companies concentrate on young people astheir customers. A company that starts to sell new consoles in agiven marketplace might face a lot of competition from other players.However, in order to win new customers by selling video game consolesand games, this company can introduce new games for children and orolder folks. This group, including other casual players, couldincrease the company’s customer base.
Ifthe above company fails to apply in itsoperation, then it could find itself in the red ocean. This is simplyby selling the same games and video game consoles to customers. Itbecomes so difficult for it to establish itself since the market isalready declining due to saturation. The existing customers havetheir suppliers which make it challenging for this new video gamecompany.
Theadvantages to this move could be that the company can flex itsmuscles and compete with the rest for the existing customers. Thismakes it improve the quality of its services and meet the standards(Siegemund, 2008). It, therefore, able to strongly compete in anygiven environment since it has already aligned its operation systemsin the market. The disadvantage to this move is that it may be forcedto use a lot of money to build its brand, face more competition, taketoo long to pick up and even fail to make large profits.
Kim,W. C., & Mauborgne, R. (2005). Blueocean strategy: How to create uncontested market Space and make thecompetition irrelevant.Boston, Mass: Harvard Business School Press.
Siegemund,C. (2008). BlueOcean Strategy for small and mid-sized companies in Germany:Development of a consulting approach.Hamburg: Diplomica-Verl.