Blue Ocean Strategy
"The biggest mistake anyone can make is to focus on the competitor. You focus on the consumer and you will get it right." – K.B.Dadiseth
Competing in the overcrowded market is no way to sustain high performance; the real opportunity is to create Blue Ocean of uncontested market space.
Blue Ocean denote all industries not in existence today-the unknown market place, untainted by competition. In Blue Ocean DEMAND is created rather than fought over. The Opportunity for growth is rapid, ample and more important profitable.
The ways to create Blue Oceans are:
i) Companies can give rise to completely new industries
Eg – eBay created on-line industry
ii) Creating from within a Red Ocean – when companies alter boundaries of
an existing industry.
Blue Ocean strategy, by contrast doing business, where there is no competitor. It is of creating new, not segmenting the old one.
Red Ocean Vs Blue Ocean Strategy
In all the strategic issues of a corporate culture, one thing that is inevitable is the “Competitive Advantage” over their rivals. In competitive advantage, one is expected to out-perform rivals and capture a greater share of market place.
The result of competitive advantage is that we ignore two important issue here,
One is Find & Develop market where there is little or no competition. Creating Blue Oceans.
Second one is to develop and protect Blue Oceans thus created.
Creating a Blue Ocean Strategy the necessities:
• Is your company facing heightened competition from domestic and international rivals?
• Does your sales representatives increasingly argue they need to offer deeper and deeper price discounts to make sales?
• Do you find you need to advertise more to get noticed in the marketplace, yet the impact of each advertising dollar spent is falling?
• Is the company focused more on cost cutting, quality control, and brand management at the expense of growth, innovation, and brand creation?
• Do you blame your slow growth on your market?
• Do you see outsourcing to low cost companies or countries as a principal prerequisite to regain competitiveness?
• Is it easier to get funding to match a strategic move made by your competition than it is to get internal funding to support a strategic move that allows you to break away from the competition?
If you answered yes to any of the questions above, then blue ocean strategy is right for your organization.
In the Blue Ocean Strategy methodology, the Four Actions Framework and ERRC grid assist managers in breaking the value-cost tradeoff by answering the following questions: • What factors can be eliminated that the industry has taken for granted? • What factors can be reduced well below the industry’s standard? • What factors can be raised well above the industry’s standard? • What factors can be created that the industry has never offered?
Create a Blue Ocean Strategy in Four Steps : (Ref: BOS by Australian Casella Wines in U.S.&Australian Wine Market) The steps they took to create a blue ocean strategy—steps that any company can take to get out of the red ocean of competition: 1) Eliminate factors that the industry takes for granted but adds no perceived value to customers. (Eg . Casella Wines recognized that most wineries touted aging and tannin qualities, two factors that intimidated customers. Casella decided to focus their efforts on different qualities. ) 2) Reduce factors well below the industry’s standard to avoid the mistake of over delivering in order to beat the competition. (Eg. To avoid customer confusion, Casella Wines limited their offerings to just one white wine and one red wine.) 3) Raise factors well above the industry’s standard so your customer won’t have to make compromises. (Eg....
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