Blue Ocean Strategy

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Blue Ocean Strategy - Term Paper

Texas A&M University-Commerce

MGT 528

Table of contents

Introduction3
Identification of Critical Issues & Analysis 3
Literature Review 4
Structuralist Views5
Reconstructionist Views8
Evaluation of Alternatives10
Pro’s and Con’s of Both Views 11
Business Model 13
Most Effective Strategy 14
Recommendations15
Conclusion 15
References 17
Appendices 20

Introduction

Corporate Strategy is an important part of the theory and practice of management. For top management, strategy is what a map or a compass is to a sailor on a ship; it is a map for navigating the corporate ship towards its desired goal (Srinivasan, 2009).

Strategies are a reality of any business model whether a manufacturer, beverage company, legal firm, or fast food restaurant. A critical question to consider is which business strategy the organizational leader will choose to apply in order to create sustainable initiatives that increase revenue. The research herein will address the key strategies organizational leaders apply to their business models today, the pros and cons of each theory, challenges and opportunities associated with each theory, and recommendations will be made as to which strategic theory demonstrates the most effective strategic formula for creating and sustaining new market shares while maintaining previously established markets. Identification of Critical Issues and Analysis

In the global business world, whether the firm’s strategy is from the structuralist or the reconstructionist school of thought, there will always be a certain amount of competition within an industry.

Kim & Mauborgne (2005), explain the structuralist view of strategy as a competition-based strategic thinking model where firms compete in ferocious battles for existing market with financial constraints within a red ocean (area in the market where head-to-head bloody competition occurs). To achieve sustainment in the business world, structuralistic strategy focuses on building advantages over the competition and beating the competition one way or another. From the standpoint of the reconstructionist view of strategy, the challenge looks very different. The reconstructionist believes in creating new demand within untapped markets within the blue ocean (area in the market where a new market is created where no battles occur, but new margins abound). However, the challenge lies in discovering or creating the demand. Structuralists focus on competing while reconstructionists focus on value innovation (see Appendix 1- value innovation of Cirque de Soleil), which contrarily compels organizations not to compete, but to create new markets focusing on utility, price, and cost position (Kim & Mauborgne, 2005). Within the blue ocean reconstructionist view, Kim & Mauborgne (2005), are staunch advocates and developers of the blue ocean strategy and value innovation, however they never suggest that a corporation’s business portfolio be devoid of a balanced portfolio which consists of competitive and non-competitive strategy. Instead, Kim & Mauborgne (2005), state, “clearly what executives should be doing is getting their organization’s to shift the balance of their future portfolio toward the pioneers portion of the portfolio”, which is the portion of a company’s business that offers unprecedented value within uncharted territory.

The underlying yet critical objective may be for industry players to apply the strengths within each stratagem in order to create a balanced vision and modus operandi for their respective organizations. Literature Review

The following review of literature will illustrate an evaluation of secondary research compiled as it pertains to the aforementioned schools of thought: with the incumbent being the structuralist (red ocean) viewpoint and the upstart reconstructionist (blue...
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