Strategic Business Moves

One afternoon as my friend and I talked business strategy he told me a bit about Blue Ocean Strategy. I decided do more research in the internet on what it is all about. The strategy is embodied in the book entitled "Blue Ocean Strategy" by Professors W. Chan Kim and Renee Mauborgne and Published by Harvard Business School Press. According to the book, Blue Ocean strategy is a corporate strategy that aims to tap unclaimed markets making competition irrelevant.

The authors explained that "Blue Ocean" refers to an untapped market, a market wherein there is only little or no competition at all enabling anyone to claim the market for his own. The opposite of this is "Red Ocean" wherein competition is very high. The market is considered as very crowded already since almost everybody is producing the same type of goods or services.

Innovation is the keyword in Blue Ocean Strategy. This innovation must make people give a higher value for a certain product or service. Doing this would certainly require additional cost. However this cost is avoided by eliminating service or product features that people do not really want.

To understand the startegy, a "local" or Philippine based example must be cited. The strategic moves of the Gokongwei group of companies is an example of how the Blue Ocean Strategy was used here in the country. The Gokongwei group owns airline Cebu Pacific and Mobile phone company, Sun Cellular among other companies.

A new untapped market was opened by Sun Cellular by adding value to products already found in existing markets. They achieved this by making calls within their network free. This is a very wise move considering that the market for mobile phones has already been saturated by both Smart and Globe. As a result, people are buying into this "new market." This is evidenced by the fact that most people in the country have a sim card and a cellphone for Sun Cellular and another sim card and a phone for other networks. Others have two sim cards in a dual sim phone.

In the airline industry, Cebu Pacific has managed to apply the Blue Ocean Strategy by adding "value" to what people really want, which is to "fly." People don't care about a newspaper, a hot meal or a fancily dressed flight stewardess. What people care about is that they can "fly." In order to do this airline fares must go down since this is what people care about. Cebu Pacific did exactly just that. This forced people to buy into this "new market."

In Traditional Business strategy we talk about "crushing the competition" whereas in Blue Ocean Strategy we talk about "Creating new markets with little or no competition." Instead of "Strategic Planning" Blue Ocean Strategist resort to "Strategic thinking." Instead of "cutting prices" to capture a market, Blue Ocean Strategy is to add "value" to products and services to claim an untapped market.

The critiques argue that the principles and ideas that are said to be unique to the strategy can also be found in other traditional business strategies. The say that Blue Ocean Strategy has already existed a long time ago.

However this line of thinking is not justified. A new theory is always built upon something that has already been accepted for a long time as a scientific principle or even theory. (As similarly as the theory of relativity rest upon the foundations of the principles of electricity, gravity, thermodynamics etc.) Our way of discovering something is built upon the knowledge that has been universally accepted by the majority. No matter what the critics say, it is certain that Blue Ocean Strategy is here to stay. In the years to come, it will surely have an effect on the way future entrepreneurs, managers and leaders will think and do business.

Article Source: http://www.search4allinfo.com

Want to know more about business strategy ? Visit the blog of business strategist Zigfred Diaz. He is Vice president for operations for a group of family owned corporations. He is also a Financial & Real estate broker, lawyer, law professor & writer.

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