Blue Ocean Strategy Paper

Question

Blue Ocean Strategy Paper
Write a 750- to 1,000-word paper that describes the importance of blue
ocean strategy and identifies a product or service that would be
considered a blue ocean move. Include the following:
• A description of a blue ocean strategy and its importance
• A product or service that might be considered a blue ocean move
and why
• An alternative red ocean move for the same product or service along
with the pros and cons of that strategy
Format your paper consistent with APA guidelines.

Answer

Blue Ocean Strategy Paper

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The blue ocean strategy entails the creation of hitherto unknown industries and market spaces that have not yet been tainted by competition. It involves creating demand in the context of these new market spaces instead of fighting over existing ones. This strategy is characterized by the rapidity of growth and the emergence of numerous opportunities. One way of creating blue oceans is by establishing companies that give rise to new industries (Kim&Mauborgne, 2004). This is precisely what eBay did by entrenching itself as a pioneer in the online auction industry (Kim&Mauborgne, 2004). Alternatively, the strategy may involve creating new market spaces from within the existing markets (Kim&Mauborgne, 2004). For example, a company may alter the boundaries of the existing industry.

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Blue ocean strategy is important for several reasons. To begin with, it enables companies to offer customers more values while at the same time reducing costs (Sheehan &Vaidyanathan, 2009). Customers benefit from more value because they are given an opportunity to buy a product they have never bought before (Sheehan &Vaidyanathan, 2009). At the same time, companies reduce costs because they do not have to launch expensive marketing campaigns aimed at giving their products a competitive edge in an already crowded marketplace. As pioneers of the new market spaces, the companies provide a benchmark for competitors. The strategy is also beneficial because it leads to the creation of brand equity that can last for decades. Moreover, unlike companies operating in the traditional markets, those that embrace the blue ocean strategy are able to align their activities in a manner that allows them to pursue both low cost and differentiation (Sheehan &Vaidyanathan, 2009).

The launch of eBay may be considered a blue ocean move. This is because the company moved from the traditional brick-and-mortar marketplace to the online marketplace. The company’s founder, Pierre Omidyar, was brave enough to venture into the online market, a move that required him to defy a traditional mode of commerce that has been tried and tested for centuries. EBay benefited from first-mover advantage, which enabled it to sell products online at extremely attractive prices. Another benefit was convenience, whereby customers could browse a list of items on offer for sale before deciding which ones to buy based on various factors, including price and utility.

An alternative red ocean move for the same product would have involved establishing a new platform within the existing brick-and-mortar marketplace. A major benefit of such a move is that it would have involved low risk. However, it would have been accompanied by the disadvantage of crowding by competitors. In its brick-and-mortar version, eBay would have struggled to gain popularity. By extension, it would have struggled to come up with a low pricing structure, thereby making it impossible for overall value creation to be achieved.

In conclusion, the blue ocean strategy is an ideal way of rendering competition irrelevant, creating a first-mover advantage, giving customers more value without incurring huge costs, and creating brand equity that can last for decades. Moreover, as demonstrated by the case of eBay, the strategy enables companies to provide a benchmark as pioneers of new industries, thereby giving them an unrivalled competitive edge. Lastly, companies that endeavor to look for competitive advantage within the red ocean often struggle to achieve the goals of both low cost and differentiation; in contrast, the blue wave strategy enables companies to achieve both goals.

References

Kim, W. &Mauborgne, R. (2004).Blue Ocean Strategy.Harvard Business Review, October 2004.

Sheehan, N. &Vaidyanathan, G. (2009).Using a value creation compass to discover “Blue Oceans”.Strategy & Leadership,37(2), 13 – 20.

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