Blue Ocean Strategy Literature Review
Clear business strategies help to replace previously ineffective management systems and help businesses to achieve success. The word strategy was commonly applied in the military field where precise outcome must be delivered with a little chance left for failure. Over time, the meaning of the word strategy has evolved due to its application in other activities, particularly in business environment(Sarjana, & Khayati, 2019). Strategizing is not as easy as most people perceive it because it involves well-organized and chronological events. Business strategists face the lack of clear understanding of their competitive environment and interpreting competition effects in the business. The paper seeks to conduct a literature review of the blue ocean strategy while offering its in-depth analysis. It purposes to identify the existing literature on this strategy for a better understanding. Thus, the review will focus on relevant academic articles whose selection was based on the keywords “strategic planning” and blue ocean strategy. The literature review provides term definitions, frameworks, and tools relate to the strategy. Based on the literature review, it is clear that the blue ocean strategy has become one the most recent themes of research that needs further study (Rezaire, 2019). The paper utilizes three articles from the leading researchers of the blue ocean strategy: Kim and Mauborgne, as they have developed this strategy from 1997 to 2014.
The concept of the blue ocean strategy was first created in 1997. In the article, “Value Innovation–The Strategic Logic of High Growth,” Kim and Mauborgne explained the importance of innovation values for firms. The article is about the use of the strategy in a entertainment theatre company called Bert Claeys. The context shows that the research was conducted in an era when the movie theatre industry faced many challenges due to the rise in substitutional products, drastically reducing movie visits (Kim & Mauborgne, 2014). During this period, most movie theatres were closed, but Bert Claeys was successful in utilizing uncontested competition. The company changed its product line to distinguish itself from its competitors, which showed that the blue ocean strategy can be used to beat competition. The firm re-strategized cinemas’ development into a multiplex, achieving substantial profits and development (Kim & Mauborgne, 2014). Therefore, creating a unique niche can help companies reach new untapped markets.
The two authors develop the blue ocean strategy in the article as they try to show the benefits of creating an uncontested competition space. Instead of keeping up with the competition in the saturated movie market, the firm made this competition irrelevant (Kim & Mauborgne, 2014). Consequently, the two authors use the ideas in this article to develop their blue ocean strategy and show its importance for new entrepreneurs.
In their 2012 research the two writers analyzed why some companies are able to sustain high profits margins and substantial revenue increase. According to the authors, it is vital for an organization to pay little or no attention to outdoing its competitors. It is essential to note that in the article, the authors compare value innovation and convection logic. The article compares the traditional market where some firms endure competition, while others create new and improved products, establishing untapped marketplaces for themselves.
Further, another article by Markides (2013) called “Game-changing strategies: How to create new market space in established industries by breaking the rules” which provides a one-sided argument that most firms often try to either beat or match their competitor. Firms using such a model in the same business tend to offer similar products and only vary their services and goods slightly to get market advantage. According to Markides (2013), such environments make companies compete both in quality and costs. In the article, the writers suggest that such organizations should create a new market space instead of working to beat competition in an overcrowded market. The idea is tied to the concept of the blue ocean strategy. To achieve success, businesses require to change a strategic thinking pattern to quit the typical strategies of conventional competition (Markides, 2013). The article presents a similar idea to the previous article, showing the importance of creating an unoccupied market space with a value breakthrough representation that can only be achieved beyond the accepted norms that define a company’s competition. Furthermore, the article describes the process of adding value through innovation while expanding competition boundaries (Markides, 2013). In their works, Markides, Kim, and Mauborgne show the importance of the blue ocean strategy for succeeding in a highly competitive environment.
Mi (2015), in his article “Blue Ocean Strategy,” discusses his sentiments on the best strategy that suits competitions. The central idea of the article focuses on the blue ocean strategy. According to the author, this strategy is essential when an organization enters in an uncontested market space (Mi, 2015). For example, in the hospitality industry, an organization can create an uncontested space by offering products that its competitors are not offering. For example, the hospitality industry mainly offers traditional foods, which I why a new organization can offer fast food services since it will create an uncontested space to conduct business.
The article also focuses on the main differences between red ocean and blue ocean strategies. The red ocean strategies focus on competition in an existing market to exploit the market demands by beating the competition. However, the blue ocean strategy aims to make the competition irrelevant by creating and capturing any new demand (Mi, 2015). A company can utilize the blue ocean strategy by aligning its activities to pursue low costs and differentiation. The above process helps drive any competition away. For instance, if a firm enters the hospitality industry and is differentiated and the cost of their products becomes affordable, it is likely to attract and retain new customers due to the likelihood of increased purchase. In return, this is beneficial to a firm’s growth through the firm need to be up-to-date with the technological trends to stand out from others.
In conclusion, strategizing in a competitive market is essential in today’s era due to the constant emergence of new companies. Therefore, businesses have to develop new strategies that can help them to remain competitive. Competition becomes more prevalent due to the growing number of business start-ups and increased investments. Therefore, it is crucial to adopt a strategy that enables a business to remain competitive in the industry. According to (Mi, 2015) organizations need to adopt the blue ocean strategy to remain competitive. The strategy endorses the need to be creative in the market to become more competitive. It also focuses on investing in an uncontested market space. For example, a firm may choose to create its own niche with unique goods and services, entering a new market with limited or no competition. The blue ocean strategy allows firms to make competition irrelevant while still creating and capturing new demand.
References
Kim, W. C., & Mauborgne, R. (2014). Value innovation: the strategic logic of high growth. IEEE ENG MANAGE REV, 26(2), 8-17.
Markides, C. C. (2013). Game-changing strategies: How to create new market space in established industries by breaking the rules. John Wiley & Sons.
Mi, J. (2015). Blue ocean strategy. Wiley Encyclopedia of Management, 1-1.
Rezaire, K. (2019). Is the Blue Ocean strategy sustainable?HAL.
Sarjana, S., & Khayati, N. (2019). Effective business strategy: Key to winning business competition in industrial estate. In International Conference on Trade 2019 (ICOT 2019). Atlantis Press.
