Blue Ocean Strategy Tools and Frameworks - Essay Example

Blue Ocean Strategy Name Course Name and Code Date Introduction Blue Ocean Strategy (BOS) is based on a study that was carried on 150 strategic moves covering 30 industries and spans more than 100 years. The aim of BOS is pursuing low cost and differentiation. Therefore, BOS does not want to outperform the competitors or competition in the existing industry but strive towards creating a new market space also called Blue Ocean, which results in a situation in which competition becomes irrelevant. BOS provides reproducible and systematic processes and methodologies in pursuing information for both existing and new organizations. Furthermore, the BOS tools and frameworks are designed in a visual manner to enable the building of collective wisdom, which encourages teamwork and collaboration. Numerous firms across the world are embracing BOS and utilize the tools and processes to improve processes and strategies. Can companies keep jumping out of the red into the blue? Companies have to balance the internal processes and external requirements. The companies will continue jumping, but there are some things, which these companies will never change (Chang, 2010, p. 221). For example, whether employing red or blue strategy, value creation and innovation are important. The values of the products and services have to be improved while also reflecting on the changing requirements of the consumers. For example, it is difficult for soft drink industry to jump to blue section because of barriers of entry and operational requirements (Dali et al., 2009, p. 54). The main competitors are Pepsi and Coke while limitations are on vending spots, shelf space and recognition of the brand. Hence, it becomes a challenge to jump and continues to be creative in product offering and product provision (Kim and Mauborgne, 2005, p. 13). In addition, the creativity is premised on innovation in which these companies have to improve the supply chain requirements and also to improve the efficiency of equipment and human capital (Lindič, Bavdaž, and Kovačič, 2012, p. 931). Therefore, jumping is possible, but creativity and innovation are required for sustainability of companies employing either red or blue strategy. Market dynamics are also important and frequently reviewing market share is crucial to determine the effectiveness of any strategy undertaken (Kim and Mauborgne 2014, p. 32). Any company whether employing the red strategy or blue strategy should understand the industry and also acknowledge introductions to the market. The aim is to appreciate the market movements and dynamics, which results in drafting and implementing the appropriate strategy (Orsato, 2009, p. 26). Hence, companies will not just jump without addressing the requirements of market dynamics. However, certain situations may drive a company to jump from red strategy to blue strategy. Companies employing the red ocean strategy compete in the existing market space with the aim of beating the competition while blue ocean strategy is creating uncontested market space while making competitors irrelevant. Companies will continue jumping to the blue ocean section because of creating markets, which were initially uncontested or creating products that are unique (Kim and Mauborgne, 2009, p. 76). For example, a good company that created an uncontested market is Twitter through the creation of a messaging platform; it is unique and did not replace any product during that period because consumers used messaging systems in their respective phones (Kim, Yang, and Kim, 2008, p. 526). The development of Twitter enabled Twitter to operate in uncontested market space. Through the process, it made any competition irrelevant because of the uniqueness of product and service provision (Kim and Mauborgne, 2005, p. 13). Therefore, comes with continue improving markets but factoring into consideration the innovation and market dynamic requirements. The red ocean strategy favors either low cost or differentiation while blue ocean strategy pursues low cost and differentiation simultaneously. NetJets can be seen as a leader in the aspect of differentiation and low cost in fulfilling strategic requirements (Chan Kim and Mauborgne, 2005, p. 26). The strategic approach of NetJets is allowing fractional jet ownership while keeping at a minimum the number of staff (Lindič, Bavdaž, and Kovačič, 2012, p. 933). It customers benefit through reducing flight transfer costs and overnights costs, which has attracted numerous investors making NetJets the leading travel aircraft company. The process of owning a party of the jet reduces the cost of capital acquisition since it is a group work while the reduced operational costs also cut the expenses (Kaplan and Norton, 2008, p. 62). Numerous companies may embrace the model because of the benefits, but the companies have to appreciate the cost cutting strategies and strategic review of the business to improve efficiency. And how do they prevent other companies ‘swimming’ in their blue oceans? Companies are targeting the blue oceans because of the numerous benefits. Therefore, companies currently in the blue oceans have to be creative and innovative in the production and service provision strategies (Grilo and Jardim-Goncalves, 2010, 526). It requires companies providing resources to encourage creativity and support innovation (Kim and Mauborgne 2005, p. 105). The innovation should target the products or services, and also the equipment and technologies in place. For example, offering innovative mobile phones is one thing but considering the manufacturing areas is important to reduce costs (Grilo and Jardim-Goncalves, 2010, p. 225). Hence, creativity and innovation have to factor into consideration the different processes involved in improving the operations at the manufacturing unit. Continuous creativity and innovation enables integration of the customer needs and wants into the product (Druehl and Schmidt, 2008, p. 47). Therefore, creativity and innovation are important in creating the uncontested business environment. In a business environment, there are customers and non-customers. The customers are the persons acquiring products and services from the establishment. The non-customers are seeking the same services/products from a competing entity (Raith, Staak, and Wilker, 2008, p. 227). Customer satisfaction and loyalty are appropriate for these situations and numerous programs exist, which targets improving the relationship between an organization and customers (Roth 2014, p. 442). However, to sustain in the blue oceans, the firms have to target the non-customers. The firm has to seek and understand the reasons why the customers are acquiring products and services from a competing entity (Chin, Chan, and Lam, 2008, p. 441). The approach in nature should be bipartisan. For example, Mercedes-Benz and BMW are seen as luxury products, but there are consumers preferring the Benz rather than the BMW and vice versa. Understanding the reasons driving the market enables the firm to engage with the customers and increase the customer (Aspara, Hietanen, and Tikkanen, 2010, p. 47). Thus, convincing and engaging the customers through balancing between emotional and functional components may improve customer interaction resulting in an increase in sales. To sustain the blue ocean, differentiation, and low costing strategies are important. The processes also advance efficiency and effectiveness, which translates to a reduction in costs (Kim and Mauborgne, 2005, p. 13). The customer will benefit, but the successes depend on efficiency and effectiveness of any strategy employed. The allocation of resources and evaluation of the entire process is important to define redistribution strategy depending on the efficiency (Lindič, Bavdaž, and Kovačič, 2012, p. 932). Continuous reviewing of the process and evaluations of outcomes ensure appropriate strategy to prevent the firm from the competition is incorporated. A successful company employs different strategies to succeed in a competitive environment. The marketing department has its strategies while the financial department has its expectations (Mauborgne and Kim 2005, p. 10). Formulation of a framework that brings together these different strategies is important to improve on the implementation requirements (Kim and Mauborgne, 2005, p. 13). Formulation and implementation of the strategies approach are crucial and challenge occurring during the period may inhibit the success of the process (Lindič, Bavdaž, and Kovačič, 2012, p. 930). Therefore balancing between formulation and implementation are important in determining the effectiveness of the organization. Hence, a strong framework should exist, which balances strategic formulation strategies and implementation strategies. Conclusion In conclusion, Red Ocean, and Blue Ocean are two different strategies that define the strategic directive of business. Many companies are opting towards blue ocean strategy because of the differentiation, low cost, and uncontested benefits, which are absent in the case of red ocean strategy. However, a firm has to weigh between the on the strategies but remember the strengths of innovation, creativity and understanding the market dynamics to succeed. In addition, continuous innovation and creativity, customer engagement, strategic formulation and implementation are some of the measures that define the success of an organization employing blue ocean strategy. The aspect that these different companies have to understand is the industry dynamics and utilizing the fundamentals of the dynamics to determine the appropriate strategy. Some businesses may not need to change to blue ocean strategy from red ocean strategy because of the nature of the business and the driving forces. Hence, each firm has to analyze the internal and external processes in formulating and implementing the appropriate strategy. References Adler, R.W., 2011. Performance management and organizational strategy: How to design systems that meet the needs of confrontation strategy firms. 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