Blue ocean strategy Essay
Blue ocean strategy
The concept of blue and red oceans is used to describe the market universe occupied by business. The red ocean consists of all industries which are currently in operation. In this business universe, the boundaries of industries are defined as well as widely accepted. This business world is characterized by high competition as companies try to outdo their rivals. Increase in competition crowds the market thus reducing prospects of profit and also growth resulting to cutthroat competition. This competition then turns this business ocean bloody thus the name red oceans (Kim & Mauborgne, 2005).
The blue ocean on the other hand refers to industries which are not yet in existence. Under this ocean, demand for products is created instead of being fought for as in the red oceans. This universe also has opportunities for growth and higher profitability. Under the blue oceans, competition is irrelevant since the rules are not yet set. This approach defines the potential that is unexplored by the already existing markets. Value innovation is the base of blue ocean strategy and a company creates a blue ocean when it is able to achieve value innovation with the capacity to create value for the buyer and the seller simultaneously.
The blue ocean strategy is today being used by most of the successful businesses around the world. Businesses have realized the value of adopting value innovation to help in growth and profit sustainability. China mobile company is one of the businesses which have reaped the benefits of applying blue ocean strategy in its operations (Kim & Mauborgne, 2005). Adoption of blue ocean strategy by China mobile company While using the blue ocean strategy, a company tries to create a space which is uncontested and to create and then capture new demand in the market. Another aim of the company is to ensure that competition is made irrelevant.
Blue ocean strategy also tries to break the cost trade off or the value. The other objective of a blue ocean strategy is to align the entire system of the activities of a company towards differentiation and attainment of lower costs (Kim & Mauborgne, 2005). China mobile is among the most successful companies in the mobile phone market which have largely adopted the blue ocean strategy in its operations. Competition in this market is fierce as it has more than 100 phone manufactures and over 1000 products being launched in the market. This competition led china mobile to adopt a different approach to ensure it survives in this industry.
China mobile has created over five domains of blue oceans which include the invention of TV phones, stock mobile phones, navigation mobile phones, secure mobile phones and energy saving phones. By the time china mobile was introducing some of these services to their phones, most of the companies in this field had not explored these areas making china mobile sales to increase and costs to reduce. Most of these areas like the secure mobile locks are still widely unexplored by most manufacturers of mobile phones (Federation of Hong Kong Industries, 1996).
The mobile products of China mobile are characterized by innovative products which have created and raised their demand all over the world. Their innovative processes involves integrating and converging computers, communications, and consumer electronics functions in coming up with the china mobile phones with above specifications. While developing the phones, the company looks at possible demands within the environment which may arise in the future. One of the most popular phones from this company is the navigation mobile phone. Another make that have attracted more customers is the solar powered mobile phone (Hamel, 1998).
While using the blue strategy, china mobile tries to come up with mobile phones which create demand in the market while at the same time reducing possibilities of competition. It makes phones to meet and satisfy a certain need in particular but individual market segments. Hi-tech wealth phones are secure mobile phones from china mobile which are specifically produced to fit the needs of business people as well as entertainment industry. By making this phone, the company was able to create a need in this category of people and also to increase the demand for the product.
Before invention of this mobile phone, business men and the entertainment industry had no need for secured phones. However, the nature of their work could have necessitated such a phone. By making such a phone, china mobile did not only create a need in these people but it also created awareness of such needs and successfully met them. Making products which fit or satisfy a need that a company creates is effective in creating blue oceans for a company and china mobile has been able to do this (Wang & Ahmed, 2002). China’s stock market is characterized by red hot ocean.
This market has high competition and many players who trade in the stock market. People involved in the stock market operations are keen on the different trends this market takes. China mobile identified these need and came up with the china Unicom and also china mobile which aids in operating the mobile stock business. Invention on the china Unicom led to high demand of it in the country. China mobile have to a large extent applied blue ocean strategy which have enabled it to continue growing and expanding even in the global markets.
The products of this company are widely used due to their uniqueness and their markets are not faced with competition unlike other mobile phone manufacturers (Asongu, 2007). However, despite the proven benefits of the blue ocean strategy, it is highly criticized by different authors as well as businessmen. One of the criticisms is based on the unavailability of uncontested spaces in the market. This approach is dismissed as being descriptive or taking a theoretical perspective instead of being prescriptive.
While this strategy argues that there are spaces in the market which are unexplored, identifying such places is difficult and maintaining them to avoid competition is also impossible. Since china mobile invented the TV mobiles, most of other manufacturers also followed suit thus increasing competition. The temporary blue ocean created does not last long enough to enable a company attain desired growth. Blue oceans always end up being red oceans within short periods and are hard to maintain. The cost of developing a blue ocean may thus be high than that of operating in a red ocean (Huang, n. d).
The blue ocean strategy is also criticized on the ground that there has not been any control group which have been cited or used to determine its viability. There could be many companies which failed while attempting to employ this strategy thus making the viability of this strategy questionable. This theory thus does not meet the criteria of falsiability in the real practice because no deductive process has been followed to ensure its workability (Truch, 2006). The blue ocean strategy is only an enhancement of other theories of competition and now a new idea. It expounds on Porter’s competitive theories of SWOT analysis.
However, this theory fails to recognize the potential threats that may face a firm while exploring new markets. Porter’s theory is superior in that it takes into consideration of possible opportunities within the industry and also the possible threats. Also, Porter’s theory is more practical unlike the blue ocean theory (Hollensen, 2007). Conclusion Businesses require strategic planning for them to be able to grow and be productive. There are different business strategic approaches which a business may adopt to ensure it gains a competitive edge in the market place.
Blue or red ocean strategies are some of such strategies available to a business. With increase in competition and globalization on the rise, it is vital for any business to be innovative and creative. One of the ways to ensure that a business maintains its market share and profitability is by developing products or offering services which are of higher value as compared to other available goods or services. This can be effectively done by identifying the needs of the customers and producing products that meets and creates more demand for a product.
This is only possible if a company is able to identify untapped business areas. A business should however adopt a strategy that suits its marketing needs and its growth prospects.
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