In today’s overcrowded markets, completing head-on lead to nothing but a bloody “red ocean” of rivals combating over a shrinking profit swimming pool. Some Business are battling for a competitive advantage or over market share while others are struggling for differentiation. This strategy is progressively not likely to produce rewarding development in the future. Nokia, the Finland’s falling mobile phone business has actually seen its market share and share rate toppling significantly by 90% because 2007 and the business is yet to achieve the resurgence it hopes.
Rather of competing in such red ocean of bloody competition, Nokia should make clever tactical moves by developing uncontested market space that would make the competitors irrelevant. Blue ocean is then worried about unknown markets where chances abound. First of all, this study will critically be evaluating Blue Ocean Strategy by highlighting the six concepts that Nokia can use to effectively create and carry out Blue Ocean Methods. Secondly, we will be focusing on the comparison and contrast of red and Blue Ocean, and lastly, this task will focus on an explanation of the benefit and issues of Group Work.
Blue Ocean Strategy Blue Ocean strategy challenges Nokia to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant. Instead of dividing up existing and often shrinking demand and benchmarking competition, blue ocean strategy is about growing demand and breaking away from competition. This involves creating blue oceans in a smart and responsible way that is both opportunity maximising and risk minimising.
To win in the future, Nokia must stop competing with rival firms in the battle of smartphones because the only way to beat the competition is to stop trying to beat the competition since the rules of the game are yet to be set. Because operations improve, markets expand, and players come and go, it is a big challenge for Nokia to continuing creation of blue oceans. Here, the strategic move would be the right unit of analysis for explaining the creation of blue oceans and sustained high performance. A strategic move is the set of managerial actions and decisions involved in making a major market-creating business offering. Also, Nokia has to focus on value innovation which is the cornerstone of blue ocean strategy. But again, instead of beating the competition, Nokia should focus on making the competition irrelevant by creating a leap in value for buyers and the company, thereby opening up new and uncontested market space.
Formulating and executing Blue Ocean Strategy To succeed in Blue Ocean, Nokia has to take into account the principles and analytical frameworks that are essential for creating and capturing the strategy. Nokia’s executives have to be brave and entrepreneurial, they should learn from failure, and seek out revolutionaries. Effective blue ocean strategy should be about risk minimisation and not risk taking. The tools and frameworks presented include: * The strategy canvas: it a diagnostic and an action framework for building a compelling blue ocean strategy which serves two purposes.
First, capturing the current state of play in the known market space, allowing you to understand where the competition is currently investing, the factors the industry currently competes on in products, service, and delivery, and what customers receive from the existing competing offerings on the market. Second, Nokia’s executives should fundamentally shift the strategy canvas of its operations by reorienting the strategic focus from competitors to alternatives, and from customers to non customers of the business.
The grid will push Nokia to act on all four to create a new value curve. By doing it, the grid will give four immediate benefits:
An effective blue ocean strategy has three complementary qualities: focus, divergence, and a compelling tagline. To make its competition irrelevant, Nokia should then apply the principles of Blue Ocean Strategy to succeed.
Principles of Blue Ocean Strategy Six principles will guide Nokia Corporation through the formulation and execution of its Blue Ocean Strategy in a systematic risk minimizing and opportunity maximizing way.
The remaining two principles address the execution risks of Blue Ocean Strategy.
Red and Blue Ocean strategies Competition-based red ocean strategy assumes that an industry’s structural conditions are given and that firms are forced to compete within them. Simply stated, red ocean strategy is all about outpacing competitors in existing market. The strategic choices for firms are to pursue either differentiation or low cost. Conversely, blue ocean strategy is based on the view that market boundaries and industry structure are not given and can be reconstructed by the actions and beliefs of industry players. Clearly, blue ocean strategy teaches how to get out of established market boundaries to leave the competition behind, making it irrelevant. The table below outlines the key defining features of red and blue ocean strategies.