Strategy Blue Ocean

Topics: Tourism, Maldives, Blue Ocean Strategy Pages: 10 (3089 words) Published: May 9, 2011
Literature Review

This chapter reviews the Blue Ocean Strategy concept with the framework and tools, literature on the world Tourism and Maldives Tourism and the Application of Blue ocean strategy in Maldives Tourist resorts.

2.1 Introduction

This chapter starts by looking at the concept of blue ocean strategy, its frameworks’ and tools. Different views of authors have been discussed in relation to the blue ocean strategy. Apart from that, the tourism industry as a whole and the Maldives tourism industry have been analysed. This chapter has also looked into the need for the application of blue ocean strategies and looking at some studies and examples within tourism industries that have implemented blue ocean strategies in other countries.

2.2 Blue Ocean Strategy

The Theme of Blue Ocean Strategy is to create uncontested market space and make the competition irrelevant. The cornerstone of Blue Ocean Strategy is value innovation. This is because instead of focusing on beating the competition, BOS focus on making the competition irrelevant by creating a leap in value for buyers and for the company, thereby opening up new and uncontested market space. There are two kind of market space which is the red ocean and the blue ocean (Kim and Mauborgne, 2004) Red ocean is the known market space which denotes all the industries in existence today. The industry boundaries are defined and accepted and the competitive rules of the game are known, companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced (Kim and Mauborgne, 2005). Blue oceans are the unknown market space which represents all the industries not in existence today. It is the untapped market space, demand creation and the opportunity for highly profitable growth. Competition is irrelevant because the rules of the game are waiting to be set. Most of the blue oceans are created within red oceans; however some blue oceans are created well beyond existing industry boundaries (Kim and Mauborgne, 2005). According to Metley (2008) Blue ocean strategy is the “Holy Grail for the marketers” who have been seeking since they began thinking about product differentiation, market segmentation, positioning, and all the other concepts directed toward protecting the companies from the "red ocean of undifferentiated price competition. While Colman and Buckley (2005) argue that blue oceans can create a niche for while and the market space too as it will be invaded soon therefore blue ocean strategy requires the company to continually search for new ways to break away from the crowd. William J. Bratton, former Chief of the Los Angeles Police Department, former Police Commissioner of the City of New York states that the blue ocean shows companies how to break from the status quo, create a winning future strategy and execute this fast at low cost. He views blue ocean strategy as a practical eye opener (Kim and Mauborgne, 2009)

2.3 The Strategy Canvas

The strategy canvas is a graphical illustration that captures the current state of play in the known market space. This allows companies to understand where the competition is currently investing, the factors the industry currently competes on in products, services, and delivery, and what customers receive from the existing competitive offerings in the market. The horizontal axis captures the range of factors the industry competes on and invests in. The vertical axis of the strategy canvas captures the offering level that buyers receive across all these key competing factors (Kim and Mauborgne, 2004). A detail analysis of strategy canvas is explained in Appendix B. 2.4 The Four Actions Framework

The four actions framework is developed to create a new value curve and to break the tradeoff between differentiation and low cost. It consists of ‘eliminating’ those factors that companies in one’s industry have long...
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