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Home | Business | Strategic-planning
Blue Ocean Strategy . . . The future trend of Business strategy? 
By: Zigfred Diaz
One afternoon as my friend and I talked business strategy he told me a bit about Blue Ocean Strategy. I decided do more research in the internet on what it is all about. 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. According to the book, Blue Ocean strategy is a corporate strategy that aims to tap unclaimed markets making competition irrelevant.
The authors explained that "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. The opposite of this is "Red Ocean" wherein competition is very high. The market is considered as very crowded already since almost everybody is producing the same type of goods or services.
To put it simply, Blue Ocean Strategy means to innovate something; something that makes people gives a higher value for a certain product or service. The additional cost for this innovation 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 Philippine based or 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 in the Philippines have now two cellular phones or two sim cards in a dual sim phone. One for Sun cellular, and the other for other networks.
The Gokongwei owned Cebu Pacific applied the Blue Ocean Strategy by adding "value" to what people really want, which is to "fly." In order to do this, airline fares must go down since this is what people care about. So Cebu Pacific slashed down their fares to give value to what people really want. In order to make up for this loss, they eliminated other costs such as newspapers a hot meal or a snack. This move, caused people to buy into this "new market."
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.
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.
The arguments of the critics are flawed. It should be noted that a new theory is always built upon something that has already been accepted as a theory or a scientific principle for a long period of time. (Just like the theory of relativity rest upon the foundations of the principles of gravity, thermodynamics, electricity etc.) Our mode of discovering something is built upon the knowledge that has been universally accepted. It is most certain that the strategy is here to stay no matter what the critics say. Clearly, the Blue Ocean strategy will have an impact on the way future managers leaders and entrepreneurs will do business.
Article Source: http://www.uberarticles.com/articles
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