Analysis Of Kim And Mauborgne And Their Blue Ocean Strategy

Kim, W. Chan, and Renée Mauborgne. "Blue Ocean Strategy." Davidhenard.com. Harvard Business Review. Web. 22 Oct 2013. .

Strategy formulation has been acknowledged as one of the most crucial factors of ensuring the long-term growth of the business. However, the manner in which strategy is formulated, and most importantly, the nature of the strategy chosen for the company determines its future position in the marketplace (Grant, 2005).

Competitive strategy, after Porter, came to be defined as the strategy of a business unit which seeks to achieve sustainable Competitive Advantage (SCA). The literature on strategy deems the market-based view (MBV) and the resource –based view (RBV) as two approaches to giving businesses the competitive edge they need to compete in their industries. Aside from having competitive advantage as their ultimate goal, the two approaches are also similar in the sense that they both make use of particular tools and models in their undertakings. They also differ in numerous ways,

Porter (1980) created a model which considers five important forces (Porters five forces) which aims to establish a profitable and sustainable position against the forces that determine industry competition, therefore position themselves within it and differentiating themselves where necessary in order to strategically gain a competitive advantage - this model gives vision of: Threat of new entrants, Threat of substitute products or services, Bargaining power of customers , Bargaining power of suppliers and Intensity of competitive rivalry (Porter 1980). Using models and academic theory like this allows strategy to be formed through a rational and an analytical process. Chandlers (1962) cited in (Lomash 2003) suggests the analytical process is about the determination of long-term clear goals, adopting actions to achieve these goals and then building the resources within the organization around this strategy in order to ensure it succeeds. Johnson (2005), likewise, simply suggested a three step approach to strategy - analysis, choice and implementation which goes hand-in-hand with intended strategy.

Blue Ocean Strategy, is a new theory that proposed by W. Chan Kim and Renée Mauborgne in 2005 after had studied 150 real cases that distributed in 30 industries. The core idea of the blue ocean strategy is not to arise more competitions, but to establish a new market, so there is no contest. Blue ocean strategy offers a systematic and effective method for corporations.What is the Blue Ocean Strategy exactly meaning about? There are contents of what Blue Ocean Strategy want to express to the audience: The first, it wants to tell is that avoid the current competition, and create a new market included no contest. And then , because the new market exists the no contest, relevantly, the competition is

The blue ocean strategy is a reconstructionist view of the market where no accepted boundaries or structure is present. The structure can be created or recreated by the steps taken by players in the market. Strategy and thinking is not limited by preconceived barriers, and a shift happens from a focus on the supply side to a focus on the demand side. Value innovation takes precedence over competing blindly with a simultaneous focus on differentiation and cost effectiveness. An emphasis on the demand side of the market leads to further wealth creation with high potential for payoffs.

This strategy seem challenging since this strategy focus on capture new market and new demand, which it’s required extra efforts in term of innovation of products and promotion in order to make customers realize about their product. Even there are some discussions about the blue ocean strategies; however, based on my review on customers comment said that the practical guidance on how to create them is limited. Therefore, without usual analytic framework which can be used as guidelines to create blue oceans as well as effective principles to manage risk, creating blue oceans viewed as too risky for managers to pursue as strategy for their company.

According to Slack et al. The corporate strategy or business strategy is the guide lines for the whole corporation’s businesses in relation to its markets, customers, and the competitors (2007). In the same context, the same authors discussed the link between the corporate strategy and

‘Strategic Management’ is a very complex term as many eminent researchers and scholars have had different views and conclusions on strategy. According to White (2004), “Strategic Management involves both systematically developing an idea together with its implications and testing the empirical validity & usefulness of that idea against the real world.” Thus strategy is not only about planning for future but also about confirming the validity of the hypothesis considered and implementing it successfully. Strategy formation may take various forms such as implicit, explicit or emergent. Implicit strategy is a strategy formed by intuitions of an individual. As per implicit strategists, strategic management is about reading the environment

Authors W. Chan Kim and Renee Mauborgne are both professors of strategy at INSEAD Business School, France, and are both Fellows of the World Economic Forum. They both have an established presence in the world of academics and business, so they can be considered an authority on strategic and business planning. First published in 2005, Blue Ocean Strategy introduced a new way of creating market space. Kim and Mauborgne proposed that the market could be divided into two categories: blue oceans and red oceans. In a red ocean, everything is known, the rules are laid out and the boundaries clearly defined. In a blue ocean, the competition becomes irrelevant as businesses forge into the untapped potential of the market creating their own space. This book revolutionized how businesses thought about strategic and business planning.

According The Wall Street Journal” … Cirque du Soleil, the Canadian company that redefined the dynamics of a declining circus industry in the 1980s. Under conventional strategy analysis, the circus industry was a loser. Star performers had “supplier power” over the company. Alternative forms of entertainment, from sporting events to home entertainment systems, were relatively inexpensive and on the rise. Moreover, animal rights groups were putting increased pressure on circuses for their treatment of animals.” (Murray, 2014) A new era was created transforming the concept of what is a circus today. As the Wall Street Journal described, “Cirque du Soleil eliminated the animals and reduced the importance of individual stars. It created a new form of entertainment that combined dance, music and athletic skill to appeal to an upscale adult audience that had abandoned the traditional circus. (Murray, 2014)

In the book “Good Strategy and Bad Strategy”, Richard Rumelt illustrates examples of success and failure of business management to explain the true meaning of the strategy, and tells companies how to develop a correct strategy and adhere to core of management strategy. He also emphasizes the central role of strategic management as to remind the readers to understand the huge difference between a good strategy and bad strategy. This book has three sections: good and bad strategy, sources of power, and thinking like a strategist. I will be evaluating strengths and weaknesses under these topics. After finish reading the book, I had gained a better understanding of what a good strategy means to the success of a company. According to Rumelt, a good strategy is coherent, where companies pursue multiple objectives that are connected with each other. Rumelt points out that a good strategy consists of three elements: diagnosis, guiding policy, and coherent action. (71) First, diagnosis means to define the obstacles and challenges that the companies are facing, and guidelines help the people to overcome the obstacles. Lastly, coherent action is the activities or actions that company did to be consistent with its guiding policy. Today, many of us lost the focus of the strategy, which results in the downward of businesses and organizations. Rumelt has defined the strategy as acknowledging the main problems and take coherent action to overcome the problems. Moreover, he illustrates

There are some tool produce to help implement blue ocean strategy. The Eliminate-Reduce-Raise-Create (ERRC) Grid is the matrix that help execute blue ocean strategy with the four action framework: eliminating, reducing, aising and creating. ERRC Grid help company to remain on their competitive factors. Eliminating and reduce the factor that the transitional industry take it for granted can help the new strategy to remain unique from the transitional market. Nevertheless, raising and creating some unique competitive factor the transitional market never or seldom offered that is above the industry standard. With all these “Four Actions Framework” the company can escape the transitional red ocean market by activate a new blue ocean market and create a new value curve. (Kim & Mauborgne, 2005)

The authors of the book 'Blue Ocean Strategy' are two friends who dedicated the book to their friendship, loyalty and belief in one another. They are: W. Chan Kim and Renée Mauborgne. They met twenty years before publishing the book, in a classroom – one as a professor, the other as a student. And since that time they have been working together seeing themselves like two wet rats in a drain.

Michael Porter explains that before "Competitive Strategy" most of the strategic thinking was focused on ordering and organizing of internal resources of the company and adapting it to face specific conditions in the market, or increasing the competitiveness of the company by lowering prices in order to increase its market share. Through his book "Competitive Strategy", Michael Porter seeks to bring compatibility between these approaches, offering a new way the administration to look at the strategy from the point of view of the industry itself rather than looking at it from the point of view of the market or the organizational capacities.