Sustainability of the Blue Ocean and Red Ocean Concepts - Essay Example

Sustainability of the Blue Ocean Concept (Student Name) (Course No.) (Lecturer) (University) (Date) Introduction The market is becoming highly competitive that businesses have to find new strategies that would guarantee competitive advantage (Siegemund, 2008, 114). The blue ocean strategy offers such advantage as it allows business come out of the highly competitive market through creation of their space. The created space is usually uncontested and irrelevant to the competition. Since blue ocean strategy involves division of the existing demand and benchmarking, it assists in growing the demand and breaking away the competition. Generally, business is regarded as a universe composing of two different oceans: the red ocean and blue ocean (Kim & Mauborgne, 2005, 152). The red oceans involves the all the industries that are currently existing and integrates the concept of the known market space. On the other hand, the blue ocean relates to the industries, which are currently inexistence and involves unknown market spaces. In the red oceans, the industrial boundaries are well defined and accepted, and there is proper definition of the competitive activities. As a result, every industry tries to take away the greater share of the already existing demand due to the cutthroat competition making the red ocean highly competitive. Blue oceans and Red oceans strategy Blue ocean strategy aims to create demand in the untapped spaces within the market; as a result, the concept creates greater opportunities for the business to experience profitable growth. It is significant note that some industries could be created well beyond the existing ones. However, for most blue oceans, there is creation of effective competition from within the red oceans through expansion of the industrial boundaries. Blue oceans involve setting the rules for competition, which makes it irrelevant. In red oceans, the case is often viewed as a matter of business life. Businesses operating under the red oceans always experience tough competititions, which to some extent leads to closure or failure of some businesses (Chawda, 2010, 117; Sushil, 2012, 17). Whenever the supply exceeds the level of demand in most industries, then competition meant to contract demand often fail to result in sustenance of the high performance required. In such cases, the companies experience difficult conditions in trying in compete effectively within the industries. As a result, companies go beyond the normal competition to create the blue oceans that would guarantee more profit and growth opportunities. In the recent years, most focus of the business strategies were on the red ocean, which provided good understanding on the skills of competing with the highly competitive industry from the analysis of the economic structures of the already existing industry (Kim, Mauborgne, Harvard Business School, & Harvard Business School Publishing Corporation, 2007, 97). The red ocean strategy also assisted the making choice between the strategic positions of differentiation to benchmark the rate of competition. The blue oceans might be a new term but the existence is not. Moreover, the blue oceans are important features of business life, past, and present. The reality is that industries are never constant since growth is inevitable through it either be positive or negative. Industries keep evolving as some industrial activities tend to improve, markets experiencing expansion, and players entering and exiting as time surpasses Creating Blue Ocean Impact The main objective of establishing a blue ocean strategy is to ensure value innovation. It involves creation of irrelevant competition through creating the value for both the potential consumers and the company. To create the value for the buyers, it is critical to focus on creation of the benefits and prices that the company offers while the company creates value through the price and cost structure. Therefore, the blue ocean strategy only works bests if there is proper integration of the two concepts. The innovation of the product or service needs to create value for the market with an aim of eliminating the features with no value in the current market (Wellman, Greenwald, & Stone, 2007, 108; Low & Ang, 2013, 182). The new and uncontested market space is made reachable through differentiating and reducing the costs simultaneously. Such strategies contravenes the common management methods which propose that businesses can either create the values through higher costs or ensure creation of reasonable value at lower costs to the customers. The companies could use several analytical tools in building the blue ocean strategy. The strategy of the canvas is one such tool that assists in building the strategy. It outlines the current situations within the known market space while indicating the offering levels that the consumers receive the various competing factors (Chang, 2013, 144; Robbins & Coulter, 2005, 198). Through illustration of such factors within a simple matrix, there is visibility of the value curve, which shows the relative performance of the company within industrial competition factors. Illustration of the current situation within the industry could shift the focus away from the current competition to the alternatives and noncustomers (Dennehy, 2012, 182; Randall, 2015, 13). The value curves often outlines the key factors worth eliminating within the industry, factors that require reduction below the industrial standards, factors that should be raised above the industrial standards, and the newly created factors. Moreover, development of the blue ocean strategy requires reconstruction of the market boundaries to break from the competition (Upadrista, 2015, 142). There are several paths that could assist to determine the correct strategy including focusing on the alternative industries, strategic groups operating within the industry, looking across the chain of the consumers, complementary products and services offered, functional or the emotional appeal of the buyers, and time (Kangas, 2003, 116). Through analysis of such factors, the company might be able to get an insight into the methods of opening up the blue oceans through reconstruction of the market realities and leaving behind the conventional boundaries of competition. Forces behind the Blue Ocean Strategy There are several factors behind the increasing application of the blue ocean strategy within businesses. The major factor is the rising levels of technology within the industry while similarly making the suppliers produce the maximum possible variety of the products and services (Vorster & Ungerer, 2013, 182). As a result, there has been increment in the number of industries, which makes the supply to exceed the demand. Globalization trends accelerated the situation. There trade barriers between different countries are also becoming lenient and with the information about the products and prices become available easily and instantly globally, the market niches and chances for the monopolies to continue keeping the market at bay disappears (Gandellini, Pezzi, & Venanzi, 2013, 167). Even though the supply keeps rising as competition levels continue to increase globally, there is no clear evidence of such increment in the global demand or data pointing towards the declining populations in most developed markets. Such positions resulted in increased commoditization of products and services, intensification of the price wars, and contraction of the profit margins. Most ccompanies mainly focus on the marketing strategies, which allow them to fight and beat competition at a greater expense. The blue ocean strategies encourage representation of high product differentiation through concurrent pursuit and low cost (Mi, 2015, 1). As a result, there is creation of irrelevant competition. While making the competition irrelevant, businesses should focus their marketing strategies on alternative methods of coping with escalating levels of competition, customers, and how to attract new potential customers (Jennex, 2008, 67). To create an irrelevant competition, companies should focus on developing strategies that integrate the concepts used by the competitors to enable them compete effectively. In every free and efficient market, economic factors like demand must exist. Businesses fight for exploitation of the existing demands various industries rather than creation (Mckeown, 2012, 127). The brand managers of the companies should understand that very good might not be good enough, therefore, while creating new demand for the products, creation of emotional connection like ergonomics and message with customers is crucial. Businesses aiming to lead within the industry need to create and capture the emotional space in the market (Birkinshaw, 2004, 107). Advertising and pricing allowances encourages the companies to harvest the already generated demand as well as creating new demand through consumer awareness. Additionally, the marketing managers should integrate the views of all stakeholders instead of only dwelling on the suggestions of the brand managers and assistants (Kim, Mauborgne, Furman, & Recorded Books, 2007, 150). Blue ocean strategy plays a significant in creating organizational brand. For the major services and products, the brands are usually almost the same. Such similarities make consumers make selection based on the prices. The customers no longer ask about the products based on their experiences. Due to the amount of overloads within the industries, there are ways of differentiating the brands, which in most cases appear harder in both economic downturns and upturns. Examples in Application In Apple Inc., the application of the blue ocean strategy is clear on its portfolio at corporate level. The company created future profits and growth through reconstructing the industrial boundaries but not thorough exploitation of the existing market demand. Through such reconstruction, Apple created a new market space and unlocked the latent demand. As a result, it experienced exponential growth in the value as the market value of the company reflects not only the better performance but also organizational future profitability. Canon also used the blue ocean strategy. The company create the personal desktop copier industry. The manufacturers of the traditional copier machines targeted the office purchasing managers who required large, durable, fast, and machines that required minimal maintenance. Canon defied such industrial logic an created a blue ocean strategy of the new market space through shifting the target customer of the copier industry from the corporate purchasers to users. Since desktop copiers and printers were small and easy to use, the company created a new market space through focusing on important competitive factors. Through defining the target buyer, most companies often see fundamentally new methods of unlocking the value. Conclusion The blue ocean strategy describes that it is significant to reconstruct the boundaries within the market with an aim of breaking away from the unsustainable competitions. Moreover, the concept highlights that creation of the blue ocean is the major search risk most companies struggles with. However, the main challenge is to identify successfully and effectively the blue ocean strategy out of the haystack of the possibilities existing within the industry. 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