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Thus, the name of the program – find a lee ocean, a new ocean to swim in. Red ocean strategy, as a business method be opposite to blue ocean strategy, is a head to head battle where the players of a particular segment compete with each other remaining in the same market space I. E. Within the boundaries of the same industry on the principle of ‘competitive advantage’. 2. The authors allude to the fact that most companies borrow their strategic thinking from military models (see ‘Paradox of strategy).
How does this model affect perceptions related to competition and customers and what are the implications for creating value for markets (and employees! )? Corporate strategy is heavily influenced by its roots in military strategy. The very language of strategy is deeply imbued with military references-??chief executive” officers” in “headquarters”, “troops” on the “front lines”. Described this way, strategy is all about red ocean competition, accept the key constraining factors of war—limited terrain and the need to beat an enemy to succeed.
At the same time, red ocean strategy would lead to hyper-competitive work environment, thus, reduce the cohesion of company staff. . Using the “Snapshot of the blue ocean creation exhibit, list and explain the key success factors for the three industries (auto, computer, movie theaters ). Blue Ocean Strategy suggests that an organization should create new demand in an uncontested market space, or a “Blue Ocean”, rather than compete head-to-head with other suppliers in an existing industry. When we looked back over 100 years of data on the blue ocean creation to see what patterns could be discerned.
Some of our data are presented in the exhibit “A Snapshot of Blue Ocean Creation. ” It shows an overview of eye blue ocean creations in three industries that closely touch people’s lives: auto—- how people get to work; computers—-what people use at work; and movie theaters—- where people go after work for enjoyment. We found that: Blue oceans are not about technology innovation; Incumbents often create blue oceans— and usually within their core business; Company and industry are the wrong units of analysis; Creating blue oceans builds brands. 4.
The author claim “demand is created rather than fought over” in blue oceans. What does this mean? Cite examples from he article. Blue oceans, in contrast, denote all the industries not in existence today-?? the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.
The corner-stone of Blue Ocean Strategy is ‘Value Innovation’. A blue ocean is created when a company chives value innovation that creates value simultaneously for both the buyer and the company. The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market. The authors criticize Michael Porter’s idea that successful businesses are either low-cost providers or niche-players.
Instead, they propose finding value that crosses conventional market segmentation and offering value and lower cost. 5. Explain the redefined relationship teens and “low cost” in blue ocean strategies. What is the traditional basis of “competitive advantage” in red ocean strategies? Value Innovation, the simultaneous pursuit of differentiation and low cost, is the cornerstone of blue ocean strategy. Value innovation focuses on making the competition irrelevant by creating a leap of value for buyers and for the company, thereby opening up new and uncontested market space.
Because value to buyers comes from the offerings utility minus its price, and because value to the company is generated from the offerings rice minus its cost, value innovation is achieved only when the whole system of utility, price and cost is aligned. In Red Ocean, the competition rules are already exited. Those companies in Red Ocean try to perform better to get more shares in market. So, competition is the theme of Red Ocean. If companies want to get competitive advantage in Red Ocean, the bases are 1 . Compete in existing market space, 2.
Beat the completion, 3. Exploit existing demand, 4. Make the value-cost trade-off, 5. Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost. . Explain the industry and market dynamics of Ford’s Model T blue ocean strategy. What product concepts and markets were involved in this strategy? How was the relative value created (include pricing in your answer). In 1908, while America’s five hundred automakers built custom-made novelty automobiles, Henry Ford introduced the Model T.
He called it the car for the great multitude, constructed of the best materials. ‘ Although it only came in one color (black) and one model, the Model T was reliable, durable, and easy to fix. And it was priced so that the majority of Americans could afford one. In 1908 the first Model T cost $850, half the price of existing automobiles. In 1909 it dropped to $609, by 1924 it was down to $240. In comparison, the price of the horse driven carriage, the car’s closest alternative at the time, was around $400.
A 1909 sales brochure proclaimed, Watch the Ford Go By, High Priced Quality in a Low Priced Car. ‘ By keeping the cars highly standardized and offering limited options and interchangeable parts, Ford’s revolutionary assembly line replaced skilled craftsmen with ordinary unskilled laborers who worked one small task faster and more efficiently, cutting the labor ours by 60 percent. With lower costs, Ford was able to charge a price that was accessible to the mass market. 7. Apply what you have learned to Strata’s.
How can you use blue ocean strategic thinking for your own business strategy? List the details. A. What would your product mix look like (describe common elements for all vehicles and specific product attributes)? Actually, we would like to focus on the internal and safety of vehicles. Also, improve the technology of cars to make them more worthy. From the report about the dealership, we found that at North and East area, the lealer could sell more car than the dealers at West and South, so we increased the amount of the dealers at North and East.