Blue Ocean Strategy… The future trend of Business strategy ?
Blue Ocean Strategy… The future trend of Business strategy ?
Article by Zigfred Diaz
I was in Star Bucks Club Ultima this afternoon to talk with a friend regarding a new business that he is planning to start.
One of the things that he mentioned was this unique business strategy that’s quite different from what we traditionally learn in business school. According to him, this strategy sorts of deviates from normal business concepts that we hear and read from the usual management gurus. This strategy is called “Blue Ocean Strategy”
I was intrigued by the idea so I did a little bit of research on the subject. Blue Ocean Strategy is a corporate strategy that aims to tap unclaimed markets making competition irrelevant. The strategy is embodied in the book entitled “Blue Ocean Strategy” by Professors W. Chan Kim and Renee Mauborgne and Published by Harvard Business School Press. The authors claim that the Blue Ocean Strategy is a result of several years of study of strategic moves by over 30 industries in a span of 100 years.
In the book, “Blue Ocean” refers to an untapped market, a market wherein there is only little or no competition at all enabling anyone to claim the market for his own since it is not yet too crowded. In contrast, “Red Ocean” refers to a market where competition is very high. The market is considered as very crowded already since almost everybody is producing the same type of service and the same kind of goods.
The Blue Ocean strategy is simply to innovate something; something that makes people gives a higher value for a certain product or service. Since doing this would require additional cost, the cost that is incurred by the value added is reduced by eliminating product or service features that the market does not really care about.
In order that this can be understood well a “local” application must be cited. According to my friend a classic example of how the Blue Ocean Strategy was used here in the Philippines is the strategic moves of the Gokongwei group. As we all know, the Gokongwei group owns Mobile phone company, Sun Cellular and airline Cebu Pacific among other companies.
Since the market for mobile phones has already been saturated by both Smart and Globe, what Sun Cellular did is to create a “new market” by adding value to products already found in existing markets. As a result of this “added” value, (By making sun to sun calls free) a new untapped market was opened. It could be said that Sun Cellular is not competing directly with Globe and Smart but rather they have raised awareness among the people to buy into this “new market.” As a result, most people now have two cellular phones or two sim cards in a dual sim phone. In this way Sun Cellular is not “out-performing” Smart and Globe but rather they have created a new market, making competition irrelevant.
In the airline industry, Cebu Pacific has managed to apply the Blue Ocean Strategy by adding “value” to what people really want, which is to “fly.” People don’t care about a newspaper, a hot meal or a fancily dressed flight stewardess. What people care about is that they can “fly.” In order to do this airline fares must go down since this is what people care about. This in a sense allowed Cebu Pacific to tap into the “untapped” market. The existing market is referred to as “customers who can only afford to fly.” The untapped market is “every can fly.” This is embodied in Cebu Pacfic’s advertisement “Now every JUAN can fly” (A play on the words “every juan” = “everyone”, with “J” being pronounced as “H”, Juan is the “universal” first name of Filipinos just like John is for the Americans)Cebu Pacific has managed to slash down fares by reducing cost on service features that most people do not really care about such as hot meals etc.
Being involved with the International Marketing Group (IMG), I can now clearly see that they have employed the Blue Ocean Strategy in the way they do business. I do not know if they have being doing this consciously or unconsciously. Instead of selling insurance products directly, IMG teaches it’s clients and brokers the concepts of financial planning and management. (albeit not in a very organized manner) Product is not given primary importance. The financial broker shows his client his need for financial planning. The financial broker who is well versed in financial planning concepts then introduces products that suits the client needs. The untapped market of financial planning needs by the people is claimed by IMG and the added cost for this value service is compensated by reducing cost with regards to training agents and marketing efforts since IMG works on a model that allows insurance and financial services company to “outsource” their marketing and training. Other insurance companies have already followed this path. The trend now is that insurance agents are now becoming financial planners.
My friend’s proposed business has a similar concept but it is something more than financial planning. He wants to introduce a value added service to clients that will enable him to add value to existing service in order to capture “untapped markets” However I could not discuss the details of the plan yet, but I am sure that employing the Blue Ocean Strategy would enable him to succeed in the new business that he is thinking. Perhaps in the proper time I could help him promote his business by writing an article on it, probably when the final details of the plan have been ironed out. However you might want to check out his website at http://www.premierebusinessinc.com
In Traditional Business strategy we talk about “crushing the competition” whereas in Blue Ocean Strategy we talk about “Creating new markets with little or no competition.” Instead of “Strategic Planning” Blue Ocean Strategist resort to “Strategic thinking.” Instead of “cutting prices” to capture a market, Blue Ocean Strategy is to add “value” to products and services to claim an untapped market.
I could personally say the Blue Ocean Strategy is a unique strategy. Critiques may say that the Strategy has already existed a long time ago and that principles that are said to be unique to the strategy can be found in other traditional business strategies as well. For me, the critics may just be jealous that they were not the first ones to embody the “strategy” in compact form. The critic’s contention are not valid at all since our way of discovering something or learning something is to build upon the knowledge that has been universally accepted by the majority. A new theory is always built upon something that has already been long time accepted as a scientific principle or even theory. (Just like the theory of relativity rest upon the foundations of the principles of thermodynamics, electricity, gravity etc.) Whatever the Critics have to say, the strategy certainly is here to stay and is sure to have an effect on the way future entrepreneurs, managers and leaders will think and do business in the years to come.
Zigfred Diaz is Vice president for operations for a group of family owned corporations. He is also a Financial & Real estate broker, lawyer, law professor & writer. He regularly blogs on diverse topics including business and entrepreneurship. Visit his blog today.
Question by anne: What type of international business strategy does walmart have?
Do they use the home-replication strategy, global business strategy, multidomestic business strategy, or transnational business strategy?
I thought that they used a global business strategy with one centralized system but as I was researching I also found some info on multidomestic business strategy.. the site is a little fishy though.
Answers and links to information are appreciated 
Best answer:
Answer by sharmaprojects
Generally when a company uses the home-replication strategy for international business, they will be treading in stormy waters in that they dont know the culture, buying habits etc of the other country. In US, Walmart’s strategy is buy in high volumes to sell cheap. This will work because of the number of stores they have spreadout through the country. Yet when they step outside the country, all logistical operations, partnerships, unawareness of political and government legal adherances etc come to play. So far Walmart has not been successful internationally for this reason. I am sure they are researching as well how to operate in each of the countries where they want to go because of this diffuculty.
Know better? Leave your own answer in the comments!
Business Strategy Execution: 4 Reasons Why Your Company’s Strategy Isn’t Working
Business Strategy Execution: 4 Reasons Why Your Company’s Strategy Isn’t Working
Article by Scott Glatstein
There are many different value-creation strategies your company can follow to marketplace success. Perhaps your organization’s differentiating strategy is:
• Offering outstanding customer service like Nordstrom.• Trading on an upscale image like Mercedes. • Positioning yourself as the low-price leader like Wal-Mart.• Leveraging individualized customization like Dell.
Your business strategy defines your company’s intent. In essence, it’s a promise – a promise that defines what your organization intends to deliver to its customers and the marketplace. But articulating a good strategy is only the beginning. It’s the strategy’s execution that determines whether an organization can turn good intentions into profits.
Poor Business Strategy Execution Is Destroying Business Opportunities
Companies invest so much time, energy and finances into identifying market opportunities and developing the perfect differentiating strategy to exploit them. Yet the vast majority of these business efforts fail. Quite often, companies and organizations blame their business failures on poor strategy. However, in most cases it’s not the strategy or plan for approaching the marketplace that should be blamed. It’s the implementation of that plan and the company’s inability to “keep its promise” that causes the enterprise to falter.
In fact, several studies confirm that poor execution is the number-one reason businesses fail in today’s marketplace. David Norton, author and professor at Harvard Business School, tells us that less than 10% of all business strategies are effectively implemented. This means that poor marketplace execution of the strategy is often the culprit, and not the strategy itself. This is a wake-up call for all business executives.
Here Are Four Primary Reasons Why Your Strategies Aren’t Living Up To Their Full Profit Potential:
1. The strategy fails to recognize the limitations of the existing organization.Marketplace strategy makes huge demands on an organization’s capabilities and resources. While your organization can certainly transform its capabilities over time, there is a limit to how far and how fast. Recognizing what your organization can realistically deliver before crafting a new direction is essential to your business success.
2. Employees don’t know how the strategy applies to their daily work.Most companies don’t communicate strategy broadly or effectively to their employees. If, for example, your strategy is to offer the best service, what does that really mean? What does it mean to your salesperson on the street, to your customer service representative in the call center and to your marketing manager at headquarters? If your employees don’t know how the go-to-market strategy affects their everyday work, they aren’t likely to implement it properly.
3. The organization’s business systems or processes can’t support the strategy.It’s difficult to implement a new strategy without changing the way the organization works. Does the workflow across your various departments and divisions support your marketplace intent? Can your systems and tools meet the demands of the new strategic vision? Pursuing a new strategy with old capabilities is a recipe for disaster.
4. Performance metrics and rewards are not aligned with the strategy.Is your organization communicating that it wants to be a service leader, but instead it rewards its customer service reps for keeping calls short? Or are you creating measurement tools that make employees feel good about their performance but don’t really measure the company’s key success factors. Metrics and rewards must tie back to the specific employee behaviors sought – behaviors that support your company’s strategic vision.
These issues share one common theme – your organization’s preparedness to implement the go-to-market strategy you have created. Strategy has to be more than a feel-good presentation shared with your managers, shareholders and the media. It has to be woven into the fabric of your organization.
Your employees need clear direction and the tools and processes necessary to support them. You need to “activate” your strategy. Strategy Activation is the new bridge that spans the chasm between strategic intent and marketplace implementation. It takes “what” an organization wants to do and defines “how” it is going to do it. It ensures that every employee drives the promises made to the marketplace across every customer touchpoint every day. Without this, your strategic vision will remain a presentation and nothing more.
Pioneering Marketing Strategist, Scott Glatstein, President of http://www.imperativesllc.com/ can help you turn your market opportunities into record-breaking profits by bridging the traditional gap between executive-level strategic vision and organization-wide execution in the marketplace. For a FREE Special Report that will help you avoid strategy execution disaster so you can profit in the market
Question by jeffrey a: Is there a company incorporating principles of ethics and social responsibilty into their business strategies?
I couldn’t think of a company who does it and for me, they all think of the income that they would get.
Can you provide any evidences?
Best answer:
Answer by Eli
Starbucks. Their employees receive GREAT benefits. Even the low-level ones receive insurance and whatnot. Not to mention that Starbucks is quick to endorse charity organizations like Ethos water. Also, Starbucks provides many organics and healthy foods to its customers.
What do you think? Answer below!
Importance of Business Strategy for the Good results of Any Business
Importance of Business Strategy for the Good results of Any Business
Article by jonyy rox12
To set up an effective business and attain desirable results it is crucial to adopt particular strategies and planning that could offer lucrative outcome. This is an greatest will need of each and every business, large or small, or still on the go to join the vast business portal. To give a boom to any business it always calls for suitable tips followed strictly in order to strengthen the business performance. It becomes more essential to establish certain business strategy when it comes to online business options like setting a new online business, marketing and its advertisement.
Business strategies are methods of certain actions that consists of the specifications of sources that allow to get the exact aims on long-term grounds. The word strategy was in fact used in context of warfare describing the planning of certain mission as opposite to tactic in order to achieve distinct targets, quick or long terms. However, in business, the strategy of any business, business or business is most commonly called corporate strategy.
While talking about on the internet business strategy, it is known as on-line E marketing or on the internet marketing, referred to promote the products and services presented by any business more than the portal of world wide web for the usefulness of buyers and effective business marketing. Nowadays web marketing could be the greatest device that offers rapid growth and advertisement campaign of on-line business if applied successfully by making use of on the web media. Finest internet marketing strategy includes, internet sites, articles, blogs, press release, pay per click, banners, email marketing and online market research, these are all the important elements of on the internet marketing that promote business to achieve the set targets.
In other words, implementation of business program for selling business to attain targets by making use of net as a source is recognized as on the web business strategy. In short, business plan or strategy is a long-term policy of a business, firm, organization or organization that is applied to coordinate the different areas of any business. It highlights the targets and goals, analyzes all the internal and exterior components and set a particular future route for the business for better potential.
At present, all business companies operates below an aggressive environment and persist to formulate comprehensive business strategies that could benefit them about the competitors. However, to make it above the rivals it is essential to focus on high quality, services, creating, branding and innovation.
If you need to opt with the very best online marketing and advertising and business strategy to advertise your business, you should follow Target Industry Strategies, Positioning & Differentiation Strategies, Market & Product Development Strategies, Organizational Restructuring, and Enhance Productivity for better outcomes. In addition, for a successful online business it is critical to take into account several guidelines that offer more on the web sale. Productive businesspersons are constantly in get in touch with with their clientele without having possessing any experience to face meeting. This means that business internet site should entice visitors and should have the potential to turn them to potential costumers.
If you’re looking for business strategy visit our website for more details! Click Here To Know More About business strategy
Question by carmen s: What are some tactics that people will use to implement business strategies?
It is for a gift basket business.
Best answer:
Answer by Donny
Some of us believe that we should have the freedom to get information from the library for free. I discovered an internet library site that helps do just that. http://thefreelibrary.com and specifically may answer your question at http://www.thefreelibrary.com/Tech+conference+addresses+changing+business+tactics-a062026962 .
Good luck in your quest.
Add your own answer in the comments!
Categories: Business Strategies Tags: Business, Good, Importance, Results, Strategy
