What Is Blue Ocean Strategy?
Despite earning the accolade, Top Business Book of the Year 2005 by Amazon.com
, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, the publics interest has not paralleled the significance of its business contributions. Blue Ocean Strategy has been regarded as a revolutionary business strategy tool. In this article I will provide an introductory brief of the ideas and principles of Blue Ocean Strategys business logic as filtered through my personal lens.
How Blue Ocean Strategy Even Came About
Since the sunrise of the business age companies have battled nose-to-nose in search of continued lucrative growth in their respected industries. Companies fight a competitive advantage battling over soul of the market place, but have struggled for delineation. However, these tactics which focus on head-to-head competition should not be the way to generate profitable growth in the future. In a book that challenges everything you thought you knew about the necessities for strategic achievement, co-authors and founders of Blue Ocean Strategy W. Chan Kim and Renee Mauborgne dispute that traditional competition-based strategies result in a red ocean of bloody competition in which rivals are combating over a reduction of the profit pool. Based on a study of 150 strategic moves spanning more than a hundred years and 30 industries, the authors dispute that lasting achievement comes not from battling competitors, but from creating "blue oceans unexploited innovative market spaces ready for growth. Such strategic moves--which the authors call "value innovation"--create authoritative leaps in value that often make rivals outdated for more than a decade. Blue Ocean Strategy presents a systematic approach to making the competition irrelevant and outlines principles and tools any business can use to make and capture blue oceans. Milestone works that upend customary thinking regarding strategy, this book charts a daring innovative path to winning the future. W. Chan Kim is the Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD. Renee Mauborgne is the INSEAD Distinguished Fellow and Professor of Strategy and Management.
Example
Lets consider how Netflix, online and rent-by-mail movie business, successfully moved across existing industry standards and applied Blue Ocean.
For a moment think of how you rented movies in the late 1990s. You had to drive to the store and rent movies at a moderately high price. Worst of all, you had to return them quickly amidst your business schedule or face shamefully high late fees. This usually meant rushing back to the store by 11:00am. Until 1997, when Netflix redefined the way we borrowed movies.
Netflix's came up with a 100% consumer-focused way to rent movies as its business model challenged the existing industry standards.
Netflix created its blue ocean by being entirely different from its competition:
It had no store as movies were selected by clients online. This kept costs down for Netflix, and for its consumers.
Since movies were mailed out the public no longer had to drive to plunge them off.
Postage was taken care of by Netflix, getting free of another source of customer irritation.
Delayed fees were eliminated. You could keep a movie as long as you wanted.
Movies could also be watched online. This eliminated waiting, and added extensive value for customers.
Pricing was set using a flat-fee monthly membership formation, as an alternative of on a "per movie" basis. This gave members more value for their money.
Netflix completely changed the way the public rented movies, and changed how movie rental companies delivered those movies. As an effect, they had full control of the online and rent-by-mail marketplace for nearly a decade. Competition has now crawled in, but Netflix has had such a huge head start in the business and has established its brand name that it's going to be tough for the competition to tremble them.
It's imperative to understand that companies don't have to entirely redefine their business or business in order for Blue Ocean Strategy to work. Popularly, blue oceans are created from within existing organizations. It's typically about designing one new product or service and linking it to what buyers actually wish for; even if they don't comprehend they yearn for it.
Key Points:
Blue Ocean Strategy is a way for your business to leave the competition behind, and go into a market that's open and without interruption. Its cornerstone concepts are that companies can present themselves, and their clients, value while still increasing above their competition in a significant way.
You can apply Blue Ocean Strategy to your business by exploratory standards and steps that are a given in your business. Look to connect the lines, and classify what your consumers really want from your company, and what existing problems you can assist work out.
by: James
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