Blue Ocean Strategy Theory and Criticism

Outline the main components of Kim and Mauborgnes (2004) concept of dreary maritime scheme. Critically assess the force-outs and limitations of this approach to pursuing competitive advantage. Use relevant examples to support your argument. Introduction In the contemporary hostile business environment, knowledgeability has become part of any companys preponderating dodging for continuous survival. Nokia, despite be the worlds largest mobile phone manufacturer having a large customer base, realized how lack of creative activity to compete against rivals racy end smart phones exist its securities industry presence.Kim and Mauborgnes (2004) voluptuous maritime Strategy is one of the major contributions in that context. Accordingly, this essay examines the wild blue yonder sea Strategy concept in the following order First, the theory is explained with a real-life example. Secondly we font at few of its limitations. Thirdly, a critical appraisal of why this approach is bet ter or worse off than other competing and value innovation theories is presented and finally the conclusion is drawn. grubby Ocean Strategy openingAccording to Kim and Mauborgne (2004) the business universe consists of two distinct kinds of space Red and Blue Oceans. Red Oceans atomic number 18 the known market space where constancy boundaries are defined and accepted, and the competitive rules of the game are known. here companies try to outperform their rivals to grab a greater share of the market. As the market space gets crowded, prospects for scratch and growth are reduced. Products become commodities, and cutthroat competition turns the ocean bloody and hence, the termred ocean.Blue oceans, in contrast, refer to all the industries not in existence todaythe unknown market space, unmingled by competition. The essence of Blue Oceans is value innovation where demand is created rather than fought over. at that place is ample luck for rapid growth and profits. In Blue Ocean , competition is irrelevant because the rules of the game are waiting to be set. In contrast to Red Ocean which emphasizes either on cost or differentiation strategy, Blue Ocean suggests it is possible to attain both simultaneously. Pursuing this strategy is able to create high barriers to entry.There are two ways to create blue oceans one is to give rise to completely juvenile industries and the other is by changing the boundary of an existing industry. One of the classic examples of Blue Ocean strategy was Fords invention of Model T back in 1908. At that time the automobile industry in US was saturated (Red Ocean) with 500 small car companies manufacturing few expensive cars for the rich citizens only. Ford redefined the industry by the introduction of Model T car which was more(prenominal) robust, affordable and had less maintenance cost.With high demand and standardization in its merchandise it was able to attain both differentiation and low cost. thus instead of entering a nd competing on the same level Ford made the competition irrelevant by tapping into a whole new market or Blue Ocean within the existing industry. Limitations near of the Blue Ocean Strategy limitation suggested by Bowman (2008) includes the cost associated with failed projects and innovations, the ambiguity in the industry definition and the methodology carried out for the theory. Other Strategy Theories and ApproachesCompetitive Strategy Forces Porters fiver forces viewing competition as the main issue that business out to be addressing is in rank contrast to Blue Oceans view of value innovation and creating new market. A mellifluous research in the retail market by Barke (2010) suggests that Porters view of increased buckram leading to lower profitability is in fact true but it does not go knock off alarmingly as suggested but rather a pedestrian force. Also Blue Ocean innovation in an existing market can last for 15 years before it to go down to a basic level (Barke, 2010 ).What that means is that the profit gains from innovation, in an existing market, are a lot more than previously supposed. Disruptive Innovation Kim and Mauborgne (2004) failed to identify the difficulty in adopting Blue Ocean strategy particularly for the established firms. Christensen and Overdorf (2004) spotted this issue in their disruptive innovation model which bears similarity with Blue Ocean in that new markets can be created with the existing industry and continual innovation is needed for survival. Broadly defining, it is a strategy which disturbs the trajectory f an industry it is heading to, instead of hard to change the whole industry and does so by targeting the so called non-consumers. Christensen argues that established firms strength in resources, process, and values culture can often lead to rigidity to change and adapt to threats or explore new markets. Easy jets incremental growth and rise in dominance against other airlines much(prenominal) as British Airway s is a perfect example. British Airways tried to change its business model and retroflex Easy Jets low cost strategy but miserably failed due to its different value.Christensen and Overdorf (2000) highlight this issue about the dangers of quickly imitating by established firms and instead urges new organizational structure, acquirement means to tackle the issue. They further go on to say that small disruptive startups will incessantly have an added advantage over established firms due to less stress in managing resources and in chief operating officers quick intuitive decisions. Their theory, thus, provide a whole new perspective in Blue Ocean Strategy model. Experience Innovation and Co-Creation of ValuePrahalad (2004) argues that that today, customers want to be involved more and more in the merchandiseion regard or become co-creators instead of the overriding logic of companies that decides which product to manufacture and sell as suggested by Blue Ocean strategy and other theories. According to him, this dominant logic fails to recognize threats, seize opportunities, growth and innovation. He suggests value is created through experience of consuming the product rather than only measured by product, service or transaction (Prahalad, 2004 173).This is what terms as experience innovation that can be created through a paradigm known as DART (Dialogue, plan of attack and Choice, Risk Assessment and Transpercy). Starbucks is a good example here where people just dont go to drink coffee but rather to experience of the coffee shop culture. Trends in Nipponese Management While Blue Ocean Strategy emphasizes on finding a new market for competitive advantage, Clegg and Kono (2002) asserts that one of the rise of Japanese companies such as Hitachi and Toshiba was developing strategic alliances and co operation with other companies (Clegg and Kono, 2002 278).Further dissimilarity in Blue Ocean strategy includes Hamel and Prahalad (1989) advantage of being a f ollower rather than a leader which enables companies to have a strategic intent or a long term vision of winning and beating the biggest in the business such as Canon sought to beat Xerox and ultimately matching global unit market share. closedown The competitive perspective suggests that companies should pay close attention to their existing markets when looking for opportunities for innovation that competition is a much weaker force in terms of eroding the benefits from innovation.Disruptive innovation highlights the obstacles faced by firms in pursuing Blue Ocean but rightly urges firms to adopt this strategy for survival. With the current IT phenomena the experience innovations holistic view of measuring value through consumer is a new breadth of fresh air that should be included and be a part of Blue Ocean Strategy. Lastly, the trends in Japanese Management indicates that other successful strategy theories must also be considered alongside Blue Ocean as part of companies broad er business plan to remain competitive.