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Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant W. Chan Kirn & R. Mauborgne Harvard Business School Press (2005) 240 Pages, Hardcover, $27.95

For readers concerned with matters of business strategy and, in particular, with competitor analysis and market positioning, Chan Kim and Mauborgne's work should be familiar indeed. The piece presently under review represents the garnering and refinement of over a decade of collaborative research hitherto published in the top journals in both strategy and international business, and that is pitched squarely at the practicing manager. Based on the study of more than one hundred and fifty "strategic moves" (managerial decisions and actions delivering products/services that opened and captured new, untapped/uncontested market space or "blue oceans") in more than thirty wide-ranging industries, the authors argue that extant work on business strategy is misguidedly focused on "red oceans" or the savage, zero-sum competition for share in known and shrinking market space. In accounting for the roots of competitive advantage, they argue that it is the aforementioned strategic moves, rather than company or industry characteristics, that are the crucial analytical units. In this context, firms' strategic focus should shift from competitors to "alternatives" (goods/services with the same purpose but with different functions and forms), and from customers to "noncustomers" of the industry in which it resides. Utilizing their example of Cirque du Soleil to illustrate this point, the latter achieved rapid growth in a short time by breaking down market boundaries by focusing their creative attention on alternative market offerings to circuses (e.g. theater), but also by focusing on noncustomers (e.g. adult theater customers).

Their central thesis, then, is that successful firms like Cirque du Soleil or casella Wine's [yellow tail] are 'Value innovators" who look beyond the traditional Porterian structural/environmental determinism and make the competition irrelevant by creating a leap in value for customers and the company alike with "market-creating business offerings"; by successfully pursuing differentiation and low cost simultaneously, breaking the traditional value-cost tradeoff. They achieve this by radically reconstructing buyer value attributes, asking four fundamental questions; the first, 'Which of the attributes that the industry takes for granted should be eliminated?' and the second, 'Which should be reduced well below the industry's standard?' allow an insight into how firms might reduce cost. Further, 'Which attributes should be raised well above the industry's standard?' and 'Which should be created that the industry has never offered?' allow firms to lift customer value and grow new demand. To utilize an example from one of then* earlier works, that of Southwest Airlines, the latter created untapped market space in the guise of short-haul air travel by eliminating meals, in-flight films, designated seats, multiple seating classes from first to economy, membership in an airline reservation system, central airports, and hub-and-spoke route system, radically reducing their costs. Simultaneously, they created the concept of frequent point-to-point flights, with fares often 60 percent below competitors', plastic reusable boarding passes, airports in small cities or smaller, less-congested airports in larger cities and 15-minute gate turnarounds (against 35 minutes for the average carrier). By focusing on the key discriminating factors leading consumers to fly or else drive their cars, and eliminating or reducing everything else, Southwest inserted itself creatively between airlines and surface transport, thereby creating a new and highly profitable "Blue Ocean" market segment.

The book contains nine chapters in whole that are organized into three thematic parts; Conceptualization (chapters one and two), Formulation (chapters three to six), and Execution (chapters seven to nine). Notwithstanding the somewhat pithy title and the virtual barrage of often gratingly-labeled conceptual and analytical tools, frameworks and maps that seem to accompany practitioner-focused works of this nature, Chan Kim and Mauborgne's message is ultimately compelling. The present reviewer has much utilized the authors' ideas and novel case studies in graduate courses in both business economics and in strategic management, particularly in exploring the notion of defining competition in terms of substitute and alternative market offerings. Further, the authors exemplify all of their ideas with fresh and novel case study vignettes from a range of industries (examples of which include the US wine industry, corporate air travel, Japanese telecommunications, the US fitness industry, the insulin industry, and the Mexican cement industry) that practitioners and students alike can easily relate to. In summary, the volume should be of interest not only to strategic management practitioners, but also to teachers of business strategy, marketing, competitive analysis, and business economics.

Source: For more Blue Ocean Strategy, Business Strategy information, visit findarticles.com, 1blueoceanstrategy.blogspot.com

by Bruce Tucker

We all remember how New Orleans, LA looked after it was ravaged by hurricane Katrina. How can anyone forget? The sites of homes flooded up to the rooftops, people sitting by the Superdome with what seemed like no hope in sight.

Take into account the many businesses that were up and running before Katrina hit, and how many have disappeared because of it.

Imagine for a moment you are building your business. You sell widgets, you are buying, selling, tracking orders, doing account, and the many other facets of tasks that go into your business`s daily operation. In a moment`s notice, your business is wiped out. Not by bad financial planning, not by some bad accountant you hired or a lost account, but because of a natural disaster.

Is your business prepared to rebuild after a disaster? Is ready to pick up where it left off, as if nothing happened? If you answered no to both those questions then you need to get an emergency plan in place.

Backup your data. Believe it or not, even in today`s high tech world, a lot of businesses do not back up data properly. Some do it once a night and then the backup is in the same location as their main data centers. This makes no sense. If your building is wiped out, all of your data and all of your backup data is in the same place. You need to separate the two. You should do a backup of your system every night. There are many services out there that offer this at a nominal cost. When compared to what the cost will be when you lose all that data, hiring a firm that specializes in data backup and recovery will be well worth it.

Team organization. Even if you are able to rebuild your data center from your backups, if you and your team, meaning your employees, are not on the same page, and have no idea what the next steps are, or what their roles in the recovery are, you and your team will look like a bunch of chickens with their heads cut off. You should have a written plan in place as to what the efforts of each team member will be after a disaster occurs. Keeping everyone involved, and informed as to what they are responsible for, will make a transition to getting your business up and running again, a smooth one. This plan must be updated periodically, especially as employees come and go.

Write it all down. Finally, get the entire plan in writing. This plan, must be a detailed outline of steps and procedures as to exactly how to get the business up and running. It should also outline what each person is responsible for, how to get the data backup and running, who handles acquiring a temporary space to run the business and so on. This document, will be the most important item of your emergency plan, because it is the actual plan. Make sure each employee has a copy, as well as a saved version on your computer system so it gets backed up with all of your other data. Since you now have a separate vendor handling backup and recovery, your plan is safe. You may want to consider using document version control software such as Documentum. This type of software versions your plan with the ability of people making the changes of checking the document in and out, just the way a library works. When someone has it checked out, no one can make changes to it until they check it back in.

Get your emergency plan in place. You never know when a natural disaster is going to hit, and for that reason, you do not want to be unprepared when it does.

About the Author
Bruce A. Tucker is the Associate Director of http://www.Indocquent.com, an online resource for individuals and businesses to post their products and services for sale and hire. You can follow Bruce on Twitter at http://twitter.com/indocquent.



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Can you briefly explain the concept of Blue Ocean Strategy?

In order to share a useful information, I decided to post this article taken from 1blueoceanstrategy.blogspot.com.

We use the terms red and blue oceans to denote the market universe. Red oceans are all the industries in existence today – the known market space. In the red oceans, industry 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 existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Hence, the term “red” oceans.

Blue oceans, in contrast, denote all the industries not in existence today -- the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Like the “blue” ocean, it is untouched, vast and deep in terms of profitable growth.

Blue ocean strategy provides a systematic approach to break out of the red ocean of bloody competition and make the competition irrelevant by reconstructing market boundaries to create a leap in value for both the company and its buyers. Instead of competing in existing industries, blue ocean strategy equips companies with frameworks and analytic tools to create their own blue ocean of uncontested market space. The book, however, tackles not only the challenge of how to create blue oceans, but also the equally important challenge of how to execute these ideas in action in any organization.

Normally these things are not known to common people, only high ranking officials of companies are involve here. Products like Apple's Ipod, LG's chocolate bar phones, Level-up-games.com's Ragnarok, Nintendo DS & Wii, Sony Playstation, and many more are being offered to the public have gone through the evaluation of the companies if the Blue Ocean Strategy approach were successfully achieved.

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