This reports sets out the detail explanation over blue ocean strategy, highlighting the key main areas to be the market nicher. In order to be successful companies have to think beyond competition with their competitors. The report highlights the rule of game need to be set to redesign its current market strategies to the dynamic blue ocean. The report will show elements which when employed helps and organization to shift from its current strategy and create its own Blue Ocean. It will provide an insight of dynamics market, showing a comparison between red ocean strategy and Blue Ocean strategy. An analysis between both the theories will ascertain the success or failure of business in this corporate world. By injecting the idea of Halal meat, a slaughtering method in which meat has been proved hygienic, in countries where the consumption of Kocher meat is high. The idea has several benefits: cost, health and well being with customer's value addition. Blue ocean strategy is the source of highly profitable growth where Companies challenge an industries conventional wisdom and achieve the long term monetary benefits. Although there is less walk in customers initially but based on the concept and mantra laid down in Blue Ocean strategy this can led to success. Its benefits, along with conclusion and disadvantages of Blue and Red Ocean Strategy will be discussed in detail. Blue Ocean strategies are progressively being used by groups all across the world. This is because of the long term profits that have been recognized to drift towards the organization.
Key Area of Research
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The main source of research is based on the book well written by Mr. W. Chan Kim and Renée Mauborgne "Blue Ocean Strategy: How to Create Uncontested Market Space and make the Competition Irrelevant. Author have focused on the real life practices of the corporate world and explained how those companies have developed their own Blue Ocean. Other source of research includes lectures, journals, reference books and publication in cover papers. A survey has also been conducted to support the idea where around 100 people with different buying habit were questioned and public opinion over the use of Halal products as replacement of Kocher meat was asked. For assistance volunteers has designed a questionnaire for people considering the topic in context to determine whether the innovative idea would be an acceptable, healthier and hygienic solution without aggrieving religious susceptibilities of people to which most of people agreed to give their response to consumer panel. Findings based on above survey and questionnaire envisages the fact that not only Muslims prefer halal food even Jews prefer it over Kocher after informing them about its benefits and similarities exist in the concept of slaughtering referring with Hebrew Bible. The Halal meat will eliminate health issues, hygienic and will be the respectful humane way of killing an animal to consume its meat. Moreover Halal meat has requisite to raise animal reared on grasses instead of junk supplements. The blue ocean strategy proved to be of great insight as it resolved many societal and religious issues of people, its structure and of its enactment.
Critical Discussion of Strategic Models
According to well known authors and lecturers the best way to have an edge over your competition is to stop attempting to beat the competition. As per Mr. W. Chan Kim and Renée Mauborgne , whole market is based on these two strategies i.e. Blue ocean strategy and Red ocean strategy. Red ocean strategy is becoming bloody day by day and companies' management need to be more accustomed with Blue ocean strategy than current customs manager is used to. Red ocean strategy is representation of products which are in existence where as blue ocean strategy represent products or services which does not exist. Approach that creates value in product is hidden in complementary product and services. The success is to define and describe the solution customer think while selecting a product or service. Best and simple way is to think what a customer would think while buying product and his reaction after using that commodity. In red ocean strategy the ambits and limits are clearly defined and companies accept it willingly.
Always on Time
Marked to Standard
Based on Blue ocean strategy the companies should never outsource things in which they have core competencies. An artist will not let his idea to be painted with other artist. Same as the putting the feet in every shoe vis-a-vis story of strategy maker.
To increase the quantum of Blue Ocean, Companies shave to do revers engineering. Instead of focusing over their prospective customer, they need to look at non customer. Companies who approached for product differentiation need to build on powerful commodities in what buyer value.
Red ocean strategy following companies uses conventional approach to beat competition by developing position with in existing market. Contrarily operating in Blue ocean strategy do not fight over petty issues, they look beyond cat fights over profits. In other words, instead of focusing or introducing a product or service which eliminate the chances of moving toward supplementary items of competitors.
Mr. W. Chan Kim and Renée Mauborgne have termed Blue ocean strategy as value innovation. Value without innovation focuses only on creating value on incremental basis. This means that change can lead to upward trend but a slow pace, based on which survival is big issue. Simultaneously innovation without value seems to be technological change or pathetic concept or customers are unwillingly to adopt or accept innovation. Thereafter according to author Companies can attain value innovative when they are able to link innovation with:
Blue ocean strategy is new concept where Organization asks variety of questions from them to achieve niche market share where other organization have not started venture. Authors have defined a framework depending on four questions:
Which factor should eliminate industry takes for granted?
(Incase of Halal meat research health factor is taken for granted.)
Which of industries below standard factor should be reduced?
(In case of Halal meat the clotting in meat has been reduced as compared to Kocher meat)
Which of industries above standard factor should be raised?
(Here uniqueness and demand can be raise by obtaining certification from authorities)
Factors to be introduce which are never offered before.
(Punched meat in clean and hygienic manner in front of customer)
Kim and Mauborgne discussed that high performance cannot be achieved using strategies based on traditional competency. To earn more profits opportunist or entrepreneurs need to develop blue oceans.
The authors explains that many companies have traditional belief of competing with the others in the market fro survival and they are forced to do so, termed as structuralism. To remain in the market, business gurus of red ocean strategy focus on making profit through competition, usually by evaluating what opponents are doing and striving hard to do better. In these circumstances, having or attaining a bigger share of the industry is seen as a game where utility is balanced in which the organization achieved an increment in the deficit of another organization. Due to which the equation of supply becomes the variable component explain strategy in competitive market. Where, associated cost are considered as trade-offs and a company selects a unique cost or unique position. This is because the total earning level of the targeted industry is also determined by essential factors, companies ultimately seek to obtain and redistribute capital other than creating wealth. They prefer Red Sea, where there is limited growth
Blue Ocean Strategy, however, based on the view that the limits of the market and the structure of the industry can not be given and can be rebuilt from the acts and assumption of market players. This idea is termed as "reconstruction" by the authors. Assuming that the market structure and limits exist only in the minds of managers and professionals who hold this view do not let current market structures limit their thoughts and creativity. This, in reply, requires a shift in attention to demand from supply, to focus on innovation value from a focus on competition - which a source to create new demand. This is achieved through surveys, experiment and research at a time of low cost and diversity. As the market norms relating to cost and equilibrium have been broken, what will be the rules of the game? Competition in that is irrelevant. New wealth can be generated by raising the demand Due to which companies can play non sum zero game, with more perks and returns.
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Implementing blue ocean strategy does not mean a company need huge fund to launch a new strategic model in market to attain profit in near future. However companies can purchase their route to the blue ocean through research and development. From bookish point of view, this is possible, but ignores some precautions of Blue Ocean Strategy. Development over innovation is warned because the new product can be thrown out of the market by providing product for which customer is not ready to pay for it. Moreover a dependeum pendulum needs to be established between cost and price. Therefore, investing much over research and development could find a Blue Ocean, but will not guarantee success. But chances of failure increases. Basic principle and the most significant of companies' strategic requirement to be determined before investing money in its development. A company thinking to recreate a blue ocean should ensure that these number of compromises is less than the satisfaction of customer which must be maximum. Last but not the least, Blue Ocean bringing of new factors never been introduced ever. This will ensure that company seek to be different among the market people and have to move one step ahead of red ocean strategy.
In the context to differentiation of market and letting costs down, the above two questions would help in driving the costs at minimum while the other increase value for buyer. If four factors use in conjunction the competition will be irrelevant. However in today's world, developing and maintaining a blue ocean market is complicated. This is due to enormous entrants in the market and cut throat competition based on which things become common and Blue Ocean turns in to red ocean strategy.
Key findings and practical implications on the company
Creating a new business environment based on blue ocean strategy always has inherent risk. Every concept or idea has risk which needs to be addressed at initial stage in order to capitalize over it as savior and get maximum benefits with idea. There are many questions which need to be answered before the execution of concept. Blue ocean strategy assists companies in responding those concerns:
Ask is there a buyer utility available?
Will it unlock exceptional utility?
Is there a reason people will prefer over other commodity to buy?
If these are absent, there is not any potential in market to start Blue Ocean.
For the purpose of this assignment I have targeted the meat industry and meat lovers in UK. In course of survey I have came across different slaughtering houses and consumer buying meat. However they have one thing in common they are being sold to the public at large with out considering religious susceptibilities of residents. e.g. The idea move around the concept moving around ease of access of Halal food which is healthy and hygienic and does not affect religious susceptibilities of people scientifically proven.
Following are the four areas explained earlier during the critical analysis of model:
The question that organization need to know whether this innovation in marketwill generate utility and get buyers satisfaction. On conducting survey of 100 people belonging to different religious background 64 people like to have meat healthier and juicy, with mild redness on meat. People who were questioned with different background is as follows:
No. of people
The reason behind introducing this concept was Muslim usually prefers Halal meat and they have to travel a lot to purchase this. Meanwhile the concept of Slaughtering is more or less common in Hebrew Bible and Holy book of Muslims.Jews and others after being convinced on the usefulness of Halal food changed their perception and showed willingness to buy if introduced.
Generally availability of meat without clotting and mild color meat require travel to remote areas, which significantly increase cost to travel. In order to achieve equilibrium people prefer that buy in bulk to reduce their fixed over heads. However their holding and storage cost increases.
Before moving to cost, the in-depth analysis of costing need to be done. Again comparing the cost of Halal food and other meat, the cost are relatively same. The per unit cost would be increase by hiring a person slaughtering animal contrarily the same per unit cost would be reduced by saving machine hour of slaughtering.
Final question required to be answered is problem that will show upon implementation of this venture. The first and most important is to create the horizon that is benefited to customer and safe valuable time. This can be achieved by applying modern slaughtering method.
Figure 1-1 an analysis of new business launches has been shown by researcher. The survey involved 108 companies, of which 86% have opted red ocean strategy; i.e. vertical integration to the existing demand. As explained, the revenue impact based on red ocean business startup is higher than organization generating sales than Blue Ocean strategy implementers. However, the effect of Red Ocean practicing companies on their gross profit; which of course any profit seeking organization's goal is, was less than those generated from Blue Ocean.
Key conclusions student learned and success of group endeavors
After considering both the options i.e. Red ocean strategy and Blue ocean strategy, it is much better than red ocean strategy, but it is hard to come across with the new one. Blue ocean strategy has its certain limitations which affect the ups and down of organization seek to earn profit through Blue ocean strategy. As we all know that strategy implementation is not a piece of cake. The organization need to be smart with high objectives to attain goals and striving hard to attain dominant position. If they fail to apply Blue Ocean strategy successfully this would turn in to red as the opponents will use up their ideas. Some more limitation like disclosure of sensitive information would make it common and leadership in certain commodity may be loosed. In that case companies usually get their patents registered with authorities, so no one misuse that and if they want to opt this idea, they will have to pay royalty to Company.
Brand and negotiation are not considered relevant in blue ocean strategy, due to which key to success cannot be achieved. Blue ocean strategy is more a strategy and is tool to brand a concept successfully with highly improved ideas.
As a group we conclude that organization exist in Red ocean strategy and all of them have capacity and skills to compete in existing market of Red ocean strategy. What they need is to learn Blue ocean strategy and get what they need to do is gear up their skills and make more profit by raising innovation.
How individual contribution impacted the group
Group project help us to develop group of skills that increasingly important in corporate world. The best part was structuring these group properly based on which the task were been completed smoothly, relevant to both group and individual including skills to:
Break down job into pieces and part.
Proper time management
Crystallizing ideas through group discussion and explanation
Debate over assumptions and methodology
Developing skills of communication
Group projects have helped us to develop our individual capacities to:
Tackle problematic situations
Delegate task and roles
Making a pool of knowledge management
Own things and held accountable for task performances
Moral and social support
Make person problem solving
After group discussion key points were noted and conclusion was drawn considering all circumstances. Discussion and meeting were well organized and every one in the group was distributed notices and agenda before meeting specifying:
Why are we meeting?
What will be discussed?
Action taken on points previously considered?
Giving task for future on research topic and set deadlines.
By following these steps, the group was moving on the right track and was allowed to give their inputs if required. Due to which quality material on concept of Blue ocean strategy and related research was prepared. This was achieved only by each members contribution to work and give as many ideas he can which were rated down according to their significance and usefulness.