Blue Ocean Strategy Analysis - Essay Example

? BLUE OCEAN REPORT SUBMITTED TO- SUBMITTED BY- BLUE OCEAN REPORT INTRODUCTION Blue Ocean Strategy is a book about the strategy in business that goeson to promote the systematic kind of approach, which would play an important part in making the existent competition irrelevant. The authors of the book, W.Chan Kim and Rene Mauborgne are associated with INSEAD (which is a business school and also a research organization); as professors. The main idea of the book is the creation of a quantum jump in the value proposition for the buyers as well as the company. This shall be done by decimating the trade-off between the parameters of differentiation and low cost. This shall be done to help in the alignment of values of the product, as well as the proposition for profits. This book is a creation of a study, which is decade old. It is based on the analysis of a repository of moves that is based over thirty industries: and spread over a large period of over one hundred and twenty years (the period ranges from 1880 to 2000). There is a mixture of respective case studies, with the book offering a huge range of approaches which are theoretical in nature: and also a host of practical tools for capitalizing on all the growth opportunities. This shall play a very important role in the capture of market spaces which are uncontested and also present avenues for viable profit. The authors argue that the companies in coming years cannot survive in the market space by engaging in competition with each other, but by developing “blue oceans”. The book has been a best seller, having sold more than a million copies in the first year of its publication. It is also in the process of being published in the almost thirty nine languages. ANALYSIS   There  is a way of defining the concepts that form a part of the book. The red and the blue words that are used, represent the position of the market. The red oceans are representative of all the markets that are in existence today. The boundary of these organizations and the functioning is specified. The competition is also defined in these markets for all the companies. The companies are in a constant struggle to perform better than their competitors. This means that the initial services that define the nature of the market and competition become blurred. This leads to a heightened sense of competition among all the players. This has an impact on the products or services, rendering them niche. So, as a result, the firms fight fiercely with each other; eating away into the boundaries and profits of one another (Cohen and Eimicke, 1995). This bloodies the “ocean”, a metaphor for the marketplace; leading eventually to the term as the “red ocean”. The “blue ocean” is indicative of the industries that are not existence at the current point of time. These are the market spaces which are not touched by any kind of competition from the markets. There is a creation of newer demand, rather than a fight over the market space. There is a lot of opportunity for a growth vector in the market. In the oceans that are “blue”, the rules present as a part of the game have to be set and defined. The “blue” serves as an analogy for describing the potential of the market spaces that have not been explored by any of the players in existence. The main point that governs the Blue Ocean strategy is the innovation in value among the companies. There is the creation of value innovation, when any company achieves additional value for the buyer as well as the company. The rise in the value of innovation should have a positive impact on the market and raise the value of the market players. On the contrary, the values that are not deemed as being important for the market: would be reduced as a result of the new creation of value. The authors are critical of the idea that the successful players either operate on low cost; or are players that play in niche markets. There is a proposition to find value which is independent of the conventional types of market segmentation. It should also offer a higher value and lower cost as a consequence. The authors argue that the traditional strategies, although an essential part of the survival of the companies; are not sufficient for their survival. These strategies cannot sustain them. The companies must go beyond the conventional boundaries of competition and focus on newer markets. For seizing the newer profits and the opportunities of growth, they should look at the creation of “blue oceans”. The strategies that are based on competition, view that industry from a structural view point. All the firms are forced to compete within the set boundaries of competition, which is popularly called as the structural view or the determination in the environmental context (Jorner, 1994). For sustaining themselves in the market place, the organizations find out the activities: that their competitors engage in, thus finding ways to outperform the competition. According to the book, the capturing of the market space becomes a zero sum game, with the loss of one of the competitors being the profit of another. The factors of completion and the supply side of the equation in business become the determinants of the business viability. The cost and the value are seen as the primary trade-off parameters in the construct of business; thereby the businesses take either the cost or differentiation as the defining indicators of their proposition (Liam and Robert, 2004). So, the authors proposition, that instead of creating new wealth, the firms seek the redistribution of the existing wealth. These allow all the firms to play in a structure, which is deterministic in nature. The “blue ocean” strategy seeks to increase the demand side of the supply chain, creating wealth from newer dimensions. Also, this allows the players to play a non-zero sum game when compared to the conventional kinds of game structures. According to the book, the examples of “blue ocean” strategy tools include the strategy canvas, the grid that is popularly named as the Eliminate-Reduce-Raise-Create Grid, The Four Actions framework analysis and the tests for the values of focus, divergence and any kinds of taglines that are compelling in nature and constitution. Some of the methodologies that have been mentioned in the book include the Kingpins approach and the Fishbowl management (Kilman, 2006). CONCLUSION       The authors of the book have described a lot of the corporate stories from the “blue strategy” view point. But, there has been an increasing criticism of the book, as very few companies have been able to achieve any kind of success by using the theories. This has made some of the critics to say, that the models forming a part of the book are mostly descriptive rather than being perspective in their constitution (Porter, 1985). All the examples given in the book are defined from their angle, essentially from their lenses. A whole chapter in the book is based on the concept of “Tipping Point Leadership”, which discusses that the fall of crime rates in the city of New York was due to the effective leadership exhibited by the leaders. In addition, the book is representative of only three industries, which include automobiles, computers and the field of movies. In conclusion, it can be said that the book is a very powerful metaphor, rather than a book with new theories. Given the many fallibilities, this book has still been able to move people into action and explore industry dynamics from a diverse variety of perspectives. REFERENCES Cohen, Steven & Eimicke, William. (1995). The New Effective Public Manager: Achieving Success in a Changing Government. San Francisco: Jossey-Bass Publishers. Jorner, Brian. (1994) Fourth Generation Management: The New Business Conscious. U.S.: R.R. Donelly & Sons. Liam Fahey & Robert Randall. (2004). The Portable MBA in Strategy. U.S.: John Wiley & Sons. Kilman, Ralph. (2006). Beyond the Quick Fix. U.S.: Jossey-Bass Publishers. Porter, Michael. (1985) Competitive Advantage: Creating and Sustaining Superior Performance. N.Y.: New York Free Press.   Read More