The blue ocean strategy involves the identification of markets with little or no competition. This strategy has been adopted in various sectors globally. It involves the invention of products that are not in the market or improving the ones that are already in the market (Bretcu, 2018). This helps avoid pricing pressure which comes with the saturation of markets with products. Pricing pressure caused by high market competition may lead to a reduction of monetary profit which may affect the performance and success of any company. Companies that are looking into investing in a new field use this strategy to identify areas that may have the least competitors (Chadara, 2011). The strategy also helps in identifying the target customers and the current market gap. This help in the production of good and services that will be relevant in the market and face minimum competition. This guarantees the increase in profit rates boosting the performance of the company. The application of this strategy is based on several principles that make it beneficial in various businesses.
Principles of Blue Ocean Strategy
Maximizing Opportunity and Minimizing Risk
The blue ocean strategy maximizes the opportunity while minimizing any possible risk. It gives guidelines on how to avoid investing in red ocean areas. These are market sectors that are already saturated and therefore have a high competition risk (Jiri, 2010). The strategy also utilizes the idea index to mitigates the risks and increase the odds of doing well in the market. This idea is used to gauge the validity of the proposed idea in several ways. The first way is by determining whether there is a need for propel to purchase what you are buying (Arpita, 2016). The idea index also helps review the affordability of the product to the target audience and whether that price will earn a healthy profit. The last issue put at test is the knowledge of factors that may affect the performance of the business. Addressing these issues will assist any investor to maximize the opportunity while reducing the risk of the business failing.
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Step-To-Step Process
The strategy provides a step-to-step process. The blue economy strategy offers a clear guideline on the steps to follow in the process of implementing the business idea. This is done in a four-step process (Jiri, 2010). The process begins with assessing the existing market state. This will help avoid ideas that fall under the red ocean area with saturated markets and high competition levels. The other step involves exploring the paths to new market space. This helps in identifying the factors that may affect the performance of the business in the subject new market (Chadara, 2011). The process of identifying ways of converting non-customers into customers is also well illustrated. This helps increase the number of consumers thus increasing the profit of the business. These steps assist new investors to easily create an efficient strategic plan for the specific business.
Creation of a Win-Win Situation
The blue ocean strategy helps create a win-win situation between all the stakeholders involved in a business. The strategy shows how to position value, people and profit to ensure that all three factors equally benefit (Arpita, 2016). This makes sure that the strategy of the organization is created towards this approach. This strategy ensures that buyers, the company, employees, suppliers and other stakeholders involved in the business transaction. This helps improve acceptance and support from other stakeholders. The involvement of all stakeholders also helps in enforcing the sustainability of the business in the market (Chadara, 2011). The success of the company depends on the ability to attract and maintain customers. It also depends on the profit the company gets. The business model should focus on motivating employees and workers to ensure that they efficiently. The alignment of the interest of all stakeholders will ensure that the business plan is conclusive increasing the odds of the business being successful.
Empowerment through Frameworks and Tools
The strategy also empowers investors with useful tools and frameworks. This approach gives specific systematic tools that help individuals to competition from saturated red ocean markets. The approach focuses primarily on the creation of blue oceans (Bretcu, 2018). These tools provide a clear road map and visual guidance in the execution of the business plan. The tools and frameworks are built using similar strategic patterns as those used in the blue ocean strategy. Before the implementations of business idea, companies may use these tools to make the necessary changes and improve the odds of reduction of competition in the target market. These include tools like the strategy canvas, the six paths to analytical functions as well as the four action framework (Arpita, 2016). These tools help solve an existing weakness in traditional strategy in the business. These tools and frameworks empower investors to evaluate the market and manipulate various factors to boost the success of the company.
In conclusion, a blue ocean strategy is an approach used in business as they create a maximum profit of companies and organizations. This is done through the avoidance of saturated markets through identifying investment areas have little or no competition. This strategy is based on core ideas like the maximizing of the opportunity and minimizing the risk. The strategy also provided a step-to-step process for investors to follow which makes the implementing of business ideas easier and more efficient. The involvement of all stakeholders is also proposed to increase acceptance by creating a win-win situation. Lastly, the blue ocean strategy empowers investors with useful tools and frameworks which assist them reduce the risks that would hurt the business.
References
Arpita, T. (2016). Extending Boundaries of the Blue Ocean Strategy. Journal of Strategic Marketing , 12(1): 519-528
Bret, A. (2018). Competitive Strategies between the Red Ocean and the Blue Ocean . Industrial Management Journal, 25: 17-25
Chadara, S. (2011). Blue Ocean Strategy: A Review of Literature. Journal of International Business , 5(1): 126-11
Jiri, D. (2010). Empirical Validation of Blue Ocean Strategy Sustainability in an International Environment. Foundations of Management, 10(1): 133-187
