The Blue Ocean Strategy

The Blue Ocean Strategy

Competition is a common aspect for every business or firm in existence. Competition can either boost the growth of a firm or kill it off completely by grabbing away the market. Subsequently, as a firm seeking to grow, there are other ways to mitigate competition and to ensure that it stays ahead of the rest in the market and survives. More substantial firms have sought to concentrate on where the competition is high to prove their might or ability to stand above the rest. However, there is a catch in tapping the potential markets yet to be discovered by other firms. In this annotated bibliography, a scholar provides tips to tapping markets with potential where there is still less competition

The authors believe that instead of spending so much energy and firm resources in competing with other rival firms, there is a need to create a new niche or environment with potential. Thus they use metaphors to describe the competition and potential areas for rival firms. The authors use red oceans to mean regions where the firms are likely to have cut-throat competition with rivals. On the other hand, blue oceans represent untapped markets with potential and where firms would spend less energy and resources to acquire. The author believes that too much competition weighs a firm down and reduces profit margins. The authors believe that companies need to make strategic moves that eventually lead to value innovation, which they believe is the background to the creation of blue oceans. According to the authors, value innovation involves increasing buyer utility and cutting down costs. They offer two ways of achieving this, which are the strategy canvas and the four actions framework.

The strategy canvas is x-y axis, which provides a firm with a value curve based on their investments and competition on the x-axis and the returns on each factor on the y-curve. This method allows a firm to profile its competitors. Using the competitors’ value curves, the firm ventures into the second strategy, which is the four actions framework. The four actions are to Eliminate, Reduce, Raise, and Create. All these actions are based on the value curve, which is found in the first action. The authors give an example of Cirque du Soleil of Canada, which used the elimination method to boost their stance in a murky industry. The authors also offer ways of implementing the blue ocean strategy in why they give three modes of operating. First, a firm needs to reconstruct market boundaries by using ideas such as offering complementary goods and services, using a chain of buyers and alternative industries.

Secondly, the authors suggest that a firm should concentrate on the bigger picture rather than the numbers. This can be achieved by awakening, exploration, strategy fairs, and communication. These four ways are crucial in achieving new strategies to expand the market towards potential areas. The authors further provide ways of reaching beyond the existing markets and demands. The firm should seek to strike the areas with the highest potential for higher returns. The firms should then decide how to come up with prices that can attract customers and how much can affect profit margins.

Finally, the authors offer the art of execution of the strategy of Blue Ocean. The first part of the strategy is to overcome organizational hurdles through the cognitive, motivational, and political running of the office. The authors further emphasize the need to follow a fair process that involves engagement, explanation, and management of expectations of both staff and customers. The authors also create a scenario in which a company identifies a blue ocean, and the other competitors follow them there. Their suggestion is to identify a blue ocean and take a leading position by taking keen notice of the strategies to fend off competition.