Blue Ocean Strategy Case Study

Question one:
The most important thing when identifying strategy is to distinguish it from operational effectiveness. For the failure to distinguish between operational effectiveness and strategy is in many cases the main cause to why a company can’t sustain their competitive advantage between its rivals. The mix up is understandable; they are both essential to superior performance, however in the same time they work in very different ways. Operational effectiveness is performing different activities within our company more effectively. As I have mentioned before, it’s necessary for our company’s superior performance but most importantly, our company’s profitability. The main aim with operational effectiveness is to drop the cost down and
It means that you will drive to be competitive on the bases of tailoring set of activities, which will enable you to deliver a unique set of values to your customer. It also means to outperform your rivals only if you can establish a difference that can be preserved. Moreover it means to combine operational effectiveness with a strategic vision/goal. However like in the case of companies who only focus on operational effectiveness, also strategy is worthless without another important element. Strategy will and must be followed by a constant strategy positioning and implementing in order to reach success.

Question two:
Blue Ocean Strategy is basically re-defining the meaning of an” Industry”, thus creating something new, making competition irrelevant. Rather than finding ways to compete with companies that are already established in the market, you seek to find consumers that have been neglected or are currently not reached, and by expanding your efforts in those areas, you could potentially access more consumers with fewer competitors.
So, according to this theory, you can say that the business world is divided into two kinds of markets — the red ocean and the blue ocean. The red ocean consists of current industries, competition, where the rules are well-defined and competitors try to gain a higher market share of the existing demand between the rivals. And as the competition increases, the profit
With the blue ocean approach, organizations don’t focus on beating the competition but adding value to the buyer and thus, opening up a new market space.
An example would be Nintendo; they could have gone after competing against the likes of PlayStation and X-Box in a crowded and highly competitive red ocean. Instead, they were able to open up a new market entirely. The Nintendo Wii, with its innovative, new features became attractive to customers in an entirely new segment – a blue ocean –.

Also, Starbucks is a company that in my opinion had implemented the Blue Ocean Strategy successfully. At the point of their decision to establish their coffee shop, they were already so many different coffee shops available, but when Starbucks came on the scene, they didn’t focus on their coffee as much as they worked to brand Starbucks as something different, reaching an untapped level of consumers.
They offered coffee, but they also offered teas, smoothies, and Frappuccino. They cared about their décor and their music, also sold CDs and newspapers, encouraging coffee lovers to stay around and chat. This allowed Starbucks to become a social venue.

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