Blue Ocean Strategy Paper
In a marketplace that is always changing and very competitive, it can be very hard for a company or organization to set themselves apart from the competition. Companies are constantly aiming to beat out their competitors, win over customers, and obtain a product that is more desirable than the next companies. These companies are involved in a constant back and forth battle that can be very costly and not very efficient. These companies would be greatly benefited if they concentrated on creating a larger industry for their customers, creating uncontested markets, making the competition irrelevant, creating and capturing new demand, breaking the value-cost trade-off and aligning the system of their activities to pursuit differentiation and low cost. By concentrating on this list of tasks, a company will be successful in following blue ocean strategy. A Description of Blue Ocean Strategy and its Importance
Blue ocean strategy is important because it avoids costly competition and leaves the company to expand without worrying about other firms operating in their space. The first key to blue ocean strategy is focusing on noncustomers. Instead, companies should focus on creating a larger industry by attracting people who have never purchased from that industry. By doing this, not only are you creating a larger industry, but you are opening new pathways to new customers who will refer your product or service to even more new customers. After you have attracted new customers, it is time to move away from existing markets where all of the customers are doing business with either you or the competition to uncontested markets. In an uncontested market, you are the only winner because all of the customers are seeking your product or service. By making the competition irrelevant, they cannot duplicate your ideas in a way that would be commercially successful. The whole idea of blue ocean strategy is high value at low cost. As long as you are doing that, anyone attempting to imitate you will have a very hard time doing so. By having a high value at a low cost, you will not have to worry about existing demand for your product or service, instead you will create a new demand that will surpass any prior demand left by the competition. If a company does not achieve high value at low costs, competitors will easily duplicate what the company is doing, sending the company back into a red ocean state. It is not easy to align the organization with differentiation and low cost. A company must search for any opportunity possible to cut unnecessary costs and operate as efficiently as possible in order to achieve success in the blue ocean strategy. A Product or Service that Might be Considered a Blue Ocean Move A good example of a product brought to success by using the blue market strategy is Apple’s iTunes and subsequent iPod. Before iTunes in 2003, more than two billion illegal music files were being downloaded and traded every month (Brookes, 2013). Apple saw that the trend of playing music was transitioning from CD’s and cassettes to digital formats and jumped on the market immediately. When iTunes launched, it was the first user-friendly system for online music content organization and distribution. The success of iTunes worked hand in hand with another trending product during that time which was the MP3 players that played theses digital music files which were being downloaded. Apple saw the growing demand for these MP3 players and immediately jumped on the market. Another reason for Apple’s success was that they were focused more on product design than product technology, putting the customer in middle of its product innovation. By doing so, Apple created the need for its products and then took quick advantage of its newly created market space, making it very difficult for competitors to grab a slice of...
References: Kim, W., & Mauborgne, R. (2004). BLUE OCEAN STRATEGY. Harvard Business Review, 82(10), 76-84
Brookes, I. (2013, June 6). Apple, bobbing along in its own Blue Ocean Strategy space. Retrieved September 3, 2014.
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