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Book Review on Blue Ocean Strategy

Book Review on Blue Ocean Strategy

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Blue ocean strategy  a book review Blue ocean strategy a book review Document Transcript

  • A Book Review: Blue Ocean Strategy Blue Ocean Strategy is a business strategy book published in 2005 by Harvard Business School Publishing Corporation in United State of America, it was written by W. Chan Kim and Renée Mauborgne of The Blue Ocean Strategy Institute and professors at France’s INSEAD business school and cofounders of the Value Innovation Institute. Charles John C. Echavia/MBA 109/ Dr. Myrna Viado 9/7/2013
  • A Book Review: Blue Ocean Strategy By: W. Chan Kim and Renee Maubogne Introduction Blue Ocean Strategy is a business strategy book published in 2005 by Harvard Business School Publishing Corporation in United State of America, it was written by W. Chan Kim and Renée Mauborgne of The Blue Ocean Strategy Institute and professors at France’s INSEAD business school and co-founders of the Value Innovation Institute. The book exemplifies what the authors believe is the best organizational strategy to generate growth and profits in the company. Blue Ocean Strategy proposes that in order for an organization to succeed they should create new demand in an uncontested market space, or a "Blue Ocean", rather than compete head-to-head with other suppliers in an existing industry. The authors draw the attention of their readers towards the correlation of success stories across industries and the formulation of strategies that provide a solid base to create unconventional success – a strategy termed as “Blue Ocean Strategy”. Unlike the “Red Ocean Strategy”, the conventional approach to business of beating competition derived from the military organization, the “Blue Ocean Strategy” tries to align innovation with utility, price and cost positions. The book scorns at the phenomena of conventional choice between product/service differentiation and lower cost, but rather suggests that both differentiation and lower costs are achievable simultaneously. Moreover, the book scrutinize the experience of companies in areas such as watches, wine, cement, computers, automobiles, textiles, coffee makers, airlines, retailers, and even the circus, to answer this fundamental question and builds upon the argument about “Value Innovation” being the cornerstone of a blue ocean strategy. The author further emphasize that Value Innovation is necessarily the alignment of innovation with utility, price and cost positions. As a result, it creates uncontested market space and makes competition irrelevant. Brief Summary The book is divided into five parts: The first part presents key concepts of blue ocean strategy, including Value Innovation. The second part describes the four principles of blue
  • ocean strategy formulation such as how to create uncontested market space by reconstructing market boundaries, focusing on the big picture, reaching beyond existing demand and getting the strategic sequence right. The book uses many examples across industries to demonstrate how to break out of traditional competitive strategic thinking and to grow demand and profits for the company and the industry by using blue ocean strategic thinking. The third and final part describes the two key implementation principles of blue ocean strategy including tipping point leadership and fair process. These implementation principles are essential for leaders to overcome the four key organizational hurdles that can prevent even the best strategies from being executed. Critical Assessment Blue Ocean Strategy is worth the time of anyone seeking to increase their success through innovation. The authors of the book based their point on an analysis of 150 strategies from 30 industries straddling the last 100 years. Their research uncover that competition in saturated market places, termed “red oceans,” is not an effective means of success. Instead, significant success is driven by innovation, creating new markets, and identifying unmet needs with potential for growth. These areas are referred to as “blue oceans.” The concept is simple: red oceans are bloody, shark-filled swaths of market space. Unless you are the biggest shark, it is in your best interest to swim away. Unfortunately for most individuals and companies, the fear of the unknown is greater than the perpetual terror generated from swimming in a bloody ocean full of big sharks. Kim and Maubogne do not suggest that finding a blue ocean is easy. Instead, they suggest that a decent and well-executed strategy is worth the risk of facing the unknown. One of their case studies focuses on the success of Cirque du Soleil . For hundreds of years, circuses had produced contending variants circus model: a high volume, low cost show vying for the same market share. This resulted in an ultra-competitive industry with high overhead and low margins. Then came the Cirque du Soleil. This strange Canadian
  • circus gambol onto the scene with astronomical ticket prices, wild costumes, and a complete lack of anything resembling a typical circus show, it earned billions and created a one-of-a-kind blue ocean. We all know the world is a tough place. Fortunately, it is still huge, and opportunities await. Kim and Mauborgne suggest that if you find yourself in a red ocean marketplace, the safest option may be creating a new market space to swim in — a blue ocean. To Kim and Mauborgne, blue ocean space represents the areas of marketing that have yet to be discovered. They are areas that focus on “value innovation” which renders rivals obsolete and unleashes new demand. Companies that adopt this approach offer customers new reasons to buy, avoid price wars and enjoy increased sales. Conclusion Business establishment engage in head-to-head competition with other opponent in search of sustained and profitable growth, competitive advantage and in order to define its market share. Others however, find its way right into the top by breaking the rule and creating their own market though tapping uncontested one. The authors reiterated that the key to creating your own blue ocean is to concentrate on value and innovation and not on beating the competition in bloody price wars. Therefore, significant success is driven by innovation, creating new markets, and identifying unmet needs with potential for growth.