Blue Ocean Strategy
Blue Ocean Strategy
Businesses are always striving to be the better contenders than their competitors. Different theories have been thrown out to see which the best one would be. The Blue Ocean Strategy theory says that companies would be better looking for ways in which they compete against themselves and that is all. W. Chan Kim and Renee Mauborgne wrote a book called “Blue Ocean Strategy”. There is a term called Red Ocean which consists of businesses are viciously fighting against each other for their place in the specific marketplace. These two authors then came up with the idea of the Blue Ocean Strategy where organizations are able to find a way to work in the marketplace that isn’t bloodied by the competition and is free of competitors.
The Blue Ocean Strategy is based where a study of 150 strategic moves spanning over 30 different industries. In the book, the authors argue that leading companies will succeed not by battling competitors, but by steadily creating “blue oceans” of recognized market space ripe for growth. The strategy is the simultaneous pursuit of differentiation and low cost, with the theory behind it not to out-perform the competition in the existing industry, but to create new market space or a “blue ocean,” thereby making the competition unrelated.
Toyota Motor Corporation has moved from being a process innovation to becoming a product innovator thanks to its Value Innovation Strategy. Value Innovation is the simultaneous pursuit of differentiation and low cost, creating a leap in value for both buyers and the company. Because value to buyers comes from the offering’s utility minus its price, and because value to the company is generated from the offering’s price minus its cost, value innovation is achieved only when the whole system of utility, price, and cost is aligned.
A Red Ocean Strategy is a strategy which is aims to fight and beat the competition. In this case Toyota would mainly be focusing on their competitors and what their competitors are doing and how their company would be able to be first in that specific car industry. A Red Ocean Strategy ultimately leads to an organization choosing to follow one of two strategies – differentiation or low cost. Whichever is chosen the organization must align all activities with one of these strategic directions. Companies try to outperform their rivals to grab a greater share of existing demand, usually through marginal changes in offering level and price. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cut-throat competition turns the red ocean bloody.
No matter what decision a company makes there will still be competition for business. Now a day no matter what industry you are in there will always be strong competition. For the industry that I am in there so much competition and so many companies that do the same thing. Although we clearly want all the business that just does not happen. Even though our industry is so large everyone knows each other where we are able to co-market and help each other out.
A good friend of mine is a competitor of my company, he has been in the industry way longer than I have and he told me that he would love to help me out. One of the things that he told me was I will help out and there will always be insurance agents that will use different people but as long as we stay on the rotation list then it is all good. It is important for me to gain the relationships and really keep my names and face out there that way clients will know me and eventually I can get a good job out of it. If you stay competitive and not bite the heads off of your competitors you should be ok that way everything stays clean and not messy.