Blue Ocean Strategy Paper Essay Sample
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Blue Ocean Strategy Paper Essay Sample
The purpose of this paper is to identify the blue ocean strategy and its importance, the comparison between the Blue Ocean Strategy (BOS), and the Red Ocean Strategy (ROS). This paper will also explore the different business that uses each one of these strategies, the advantages and disadvantages of using these strategies.
The Blue Ocean Strategy is the simultaneous pursuit of low cost and differentiation, where the aim is not to compete with the competition but to make it irrelevant. The purpose of the Blue Ocean Strategy is to create uncontested market space, make any possible competition irrelevant, break the value cost trade off and simultaneous pursuit of differentiation and low cost. The Blue Ocean Strategy created three tiers of non-customers, first tier for soon-to-be noncustomers who are on the edge of the market. The second tier is refusing noncustomers who consciously choose against the market, the third Tier is reaching unexplored customers in distant markets. The Blue Ocean Strategy outweighs the strategy of the red ocean because, what’s better beating the competition or having none at all?
A company that I believe utilizes the Blue Ocean Strategy the best is LG electronics. They successfully implemented the Blue Ocean Strategy to beat any competition and make them irrelevant by constantly making new technology and improving existing ones. For example the refrigerator business, LG has the best refrigerators with the largest vegetable and water storage compartments, Microwaves with dark-colored interiors to hide spice stains and the only television with built in video game for cricket (if in India) and football and basketball (if in the united states). LG electronics makes the competition tough for local and global businesses in the same market. LG created untapped market space and higher profitable growth. LG target to be in the top 3 in the consumer electronics market by 2010, doubled its sales and profit by the end of 2013, focused their attention on mostly high-end products, thus eliminated the competition with low end products. Enter new segments of emerging markets like china, India, Middle East and Africa and thus creating uncontested market space.
If LG electronic used the Red Ocean Strategy the outcome would be different. The Red Ocean Strategy seeks competition, competes in existing market space, but would beat the competition, exploit existing demand, make the value-cost trade-off and align strategy choice of differentiation or low cost. As you can see it’s the complete opposite of the Blue Ocean Strategy, the Red Ocean Strategy aims to compete in existing market, if LG would consider competing it would focus more on low-end products as other electronic markets. The Red Ocean Strategy aim would be to beat the competition, which would be Samsung and G.E products where in the Blue Ocean Strategy would be to make them a non-factor. The Red Ocean Strategy aim for LG would be to use the demand level already existed in that market to push sales. Seeing that the competition would already have a demand level where as their product would be selling, LG would use that demand level to create supply. Unlike the aim of the Blue Ocean strategy to break the value-cost trade-off, the Red Ocean Strategy aim would simply be to make the quota.
The pros on the cons of the strategy is simple, its like when you aim high the burden of getting their gets harder. Competing in a market is easier, rather than making an uncontested market where the competition is little to none. Although more profitable to set a standard where no one could match, it seems impossible to do so without having a high budget plan and spending cost, which in return affect the price made available to the public. The more money you spend on a product to make it stand out from the competition the more it will cost the consumers who are reluctant to pay if there are other products claiming the same results. The advantages are endless if the strategy Blue Ocean Strategy is a proven success, but in a market where it seems inventions are limited and people are coming up with new ideas everyday, I think the strategy would be rather hard to achieved. LG uses the Blue Ocean strategy, did so on a high budget and only targeted high suburban neighborhoods where they consumers can afford to pay for luxury.
I was an employee of The Home Depot, there is where I learnt the effectiveness of each strategy, I didn’t know the actual term, but the process and aim was clear. LG refrigerator was the most expensive and featured the most advance technology, it had the best lighting and energy cost program and had a floor spot where everyone could admire the features from up close. The blue Ocean Strategy is hard to get to, but once you get it and the competition narrows, then the profit by far exceeds the expectations.