Blue Ocean strategy by gauravjindal

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									Introduction:

The Blue Ocean strategy is said to be the next big thing in the area of business strategy
development. Formulated and researched upon by W. Chan Kim and Renée Mauborgne of
INSEAD, it was published as a book and subsequently in the Harvard Business Review. The
Blue Ocean Strategy looks to make competition irrelevant by developing new market spaces,
forming vast stretches of “Blue Ocean” where competitors exist but competition does not.
The authors maintain that this can be done only if a company looks to reduce its costs while
innovating at the same time and this becomes the basis for our study.

As a group we were quite intrigued by this and decided to base our research report on testing
this concept. We took three companies from the cyber world, all leaders in their respective
areas of operation and those that had formed such blue oceans for themselves, and checked
whether these companies encourage an environment of innovativeness and risk taking. This
was done using secondary data and checking the kind of organizational culture that the
company promoted. Although this would give us only an outsider’s view, it would still be a
fairly accurate one. As these companies have already been researched upon by others. If we
were able to establish that these companies indeed encouraged risk taking and innovativeness
and had thus successfully implemented the BOS, we look to take our study further by
identifying three companies who do not have a sizeable presence online but are prime
candidates to implement this strategy in cyberspace.

As such our hypothesis for the research is as follows, “Companies in cyber space which
encourage a culture of innovation and risk taking are prime candidates to implement the blue
ocean strategy”

Blue ocean strategy – Google

When it comes to innovation, Google always comes in our minds, which has changed the
definition of a search engine. Founded by Larry Page and Sergy Brin, Google has changed all
the rules of the market. Such is its competitive advantage that Google has become a house
hold name. If you have any doubt in your mind, just type that into Google and you will get
your answers. Now, how can we say that Google used Blue Ocean strategy? Following are
some of the points in support of it which will show that Google took risks and stressed on
innovations (two key pillars of Blue Ocean Strategy):

      It did not engage in the massive advertising campaigns typical of so many dot-coms in
       1999 and early 2000, relying instead on word of mouth. Hence, it has not been forced
       into the deep cutbacks that have hurt some of its rivals.

      Search engines receive much of their revenues from advertising. Some observers say
       Google has weathered the past years ad slump better than its competitors because it
       relies on text-only ads linked to keyword searches. This is a growing ad niche because
       of the strong likelihood the user will be interested in the ad.

      Google had no restriction for Ad blockers. Google claims to have taken a lot of
       consideration to allow such extensions to be built by developers. Has Google taken a
       wild step? Analyst suggests that Google is tied on with their eco-system because they
       cannot piss off developers the way Apple do. Apple has a revenue sharing option,
       Google doesn’t have any. But many fear that such extensions could dilute the
       effectiveness of online advertisement. On the other hand, Google is optimistic about
       it. Google has reasoned out that market will stabilize itself, and people using those
       extensions are any way not a fruitful target for advertisers. Hence forth, the balance
       with strike in coming time. For the facts, recently, Google Chrome surpassed Safari
       becoming the third most popular browser.

Blue ocean strategy – Apple

Apple has created a blue ocean for itself setting its own benchmarks. It has achieved so by
following the tools to achieve blue ocean environment.

   1. Value Innovation
       Value Innovation is the cornerstone of blue ocean strategy. Value innovation is the
       simultaneous pursuit of differentiation and low cost.


       Sl.No   Awards                                Winner              Runner Up
       1       Most Anticipated gadget of 2007       iPhone              Sony PSP Slim
       2       The Drop Dead Gorgeous Award          Apple Mac Book      LG Prada
       3       Top Commuter Gadget                   Apple I Pod         Archos 704
       4       Best Music Gadget                     Apple I Pod         Sonos Bundle
       5       The Best Gadget of All Time           Apple I Pod         Sky+
       6       The Best Download Service             Apple I tunes       E music
    The above list of award justifies the innovative approach used by Apple which has made its
    products a class of its own. The ingredients of Apple's success are:

    1) Focus on design thinking

    2) Product development strategy and execution

    3) CEO as chief innovator

    4) Bold business experimentation.

    Apple has maintained a pricing strategy in accordance with its value proposition.

         2. 4 Actions Framework

    What factors can be eliminated that the industry has taken for granted?

        At Apple store thirty percent of products are Apple and remaining seventy percent of
         products are those which support Apple products. Example-Harman kardom, JBL
         Speakers and over 25000 accessories. Hence Apple was one of the few companies
         which eliminated the concept of ignoring the complimentary products, infact they
         emphasized on other products availability to add more value to their products.

    What factors can be reduced well below the industry’s standard?

      Promotions –

         Apple announces it new products on WWDC (World Wide Development Corporation)
         and it’s an event which is awaited by millions of Apple fan. It’s a three day event where
         all the new products and products for future are discussed. This is one of the major
         events for promoting their products.

         When it comes to Apple Stores opening, the event starts at twelve in the night and goes
         on till seven in the morning and people wait in lines for hours to enter the store

         By using this hype they create curiosity amongst the crowd and later on use this to satisfy
         customers craving to own an Apple product.

    What factors can be raised well above the industry’s standard?
    Green Marketing: MacBook is designed with the following features to reduce its
    environmental impact:

            Highly recyclable aluminium and glass enclosure
            Mercury-free LED-backlit display
            Arsenic-free glass
            PVC-free internal cables
            Meets ENERGY STAR requirements
        Genius Bar-An exclusive executive in every Apple store who answers any question or
         query regarding Apple product. Hence, making it very convenient for the customers to
         resolve their issues.

    What factors can be created that the industry has never offered?

        Technology
             Apple has come up with technology which Industry considered ahead of their time.
             Apple due to its high technological advancements has given industry, products which
             set new standards and never competed

    DC Design is an Indian design firm from Mumbai, which is noted for their concept cars and
    prototypes. The firm, founded in 1993, is headed by designer Dilip Chabaria and under a
    contract with Ford Motor Company built the first Aston Martin AMV8 Vantage prototype
    featured at the 2003 Detroit Auto Show.

    The company also builds custom special order vehicles, such as a modified Porsche Cayenne
    coupe, and a modified Rolls Royce coupe.

    Innovation is a key driver for the success of DC design. The company has been known to
    make some of the most mind - boggling and unconventional designs, which have earned it
    national and international acclaim. Recently, DC Design was in the news for designing
    TATA NANO, which carried a price tag of Rs. 1 Cr. The design studio has designed the cars
    flaunted in many Hollywood movies including James Bond’s, The World is Not Enough and
    Transporter 3 among others. Innovation is seen as the key to the company’s success. In the
    words of the company’s founder and chief designer Dilip Chabaria, “ DC Design values out
    of box thinking as the most important resource of our company, this is what has driven the
    company in the past and will continue to do so in the future. Technology might touch higher
    planes but can never surpass the power of the human mind.”
We believe that DC Design embraces and encourages risk as a part of their daily business
routine. The company’s core business, redesigning cars, itself reflects this. In a country which
sees conventional as beautiful, where the highest selling car has been the plain jane Maruti
800, DC Designs has been able to sustain itself and grow making cars which seem
impractical and over the top.

DC Design is therefore a prime candidate to implement the Blue Ocean Strategy. It comes up
good on the two factors that are essential to develop such a strategy and taking into account
the entry of global auto designers and the sharp increase in the number of local designers in
the redesigned car segment we feel that DC Designs will be able to carve a special market for
itself in the online world by implementing this strategy. The company can design a website
which promises to make car designing an experience rather than a mundane activity for
its clients, which allows them to design their dream cars themselves and get DC to make
it for them. Therefore we see a potential Blue Ocean for DC Design in the Online world.

Conclusion

We have analyzed using different tools that innovation and risk taking are the major factors
which a company in cyberspace should consider while creating its own blue ocean.

Blue Ocean Strategic planning for a company comprises planning in different levels of an
organization. Starting from corporate level to the business unit level, a well designed blue
ocean strategy in cyberspace consists of developing the strategies for various different
activities keeping in mind the financial performance of the firm, the consumer’s perspective,
the internal business of the company and the learning.

Now having all these in the right place at various different levels of a firm gives operation
and execution of strategy a structured roadmap. Having the proper risk and innovation will
not only help the firm to create its blue ocean, but in a long run it may give the company an
edge over all other competitors in terms of efficiency and effectiveness of service delivery.

Thus, from the above discussion we can see that a blue ocean strategy majorly focuses on
planning for the creation of competition free market space by setting strategic objectives and
goals which a company in cyberspace wants to achieve in a given period.
That is why, it can be said that even though strategic planning for creating a blue ocean in
cyberspace may not immediately create a competitive advantage for the firm at a shorter time
frame, but looking at the big picture, we can assume that this planning will definitely create
the building blocks for success for an organization, therefore assuring the competition free
market and gaining sustainable competitive advantage for the future.

								
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