01Jan '09

Using a Value Creation Compass to Discover “Blue Oceans”

Strategy & Leadership

Theme: Theoretical argument for using ‘value creation logics’ to facilitate creating blue oceans, as illustrated through an analysis of a leading German toy manufacturer.

Summary: The authors argue that companies in the mature/decline phase of the product life cycle suffering from declining revenues and decreasing customer loyalty typically attempt to increase their bottom line by increasing marketing and branding efforts while cutting costs and trying to dodge price wars. These value renovations rarely result in success, as competitors attempt the same moves. The authors suggest that instead of focusing on beating rivals, companies can grow and enhance performance by applying blue ocean strategy. However, they note, applying blue ocean strategy entails the difficult task of redefining the offering and creating new buyer value. This paper attempts to offer a new tool for managers to facilitate uncovering attributes of buyer differentiation to create blue oceans. The authors draw upon their experience in value creation to suggest that companies can utilize three distinct logical orientations  called  ‘value creation logics’ to create new value. These include industrial efficiency logic, knowledge-intensive logic and the network logic.  They propose firms can create differentiation by increasing user connectivity through network services logic or enhancing the offering's fit with the user’s needs through knowledge-intensive logic. Additionally, companies can lower costs by pursuing industrial efficiency logic. The authors argue that by combining these three logical orientations, managers can offer innovative bundles of  attributes in their offerings that simultaneously achieve differentiation and low cost. The authors illustrate their arguments using the case of Gund Teddy Bears, a leading German toy manufacturer.

Reference: Sheehan, Norman T., and G. Vaidyanathan. "Using a Value Creation Compass to Discover “Blue Oceans”. Strategy & Leadership 37 (2009): 13-20.
01Mar '09

Analysis of the Use of Blue Ocean Strategy: Case Study Analysis on 14 Different Agencies

Integration & Dissemination

Theme: Empirical evidence on the operationalization of blue ocean strategy.

Summary: The authors attempt to gather empirical evidence on the operationalization of blue ocean strategy from companies that declare to have either implemented blue ocean strategy or are in the midst of applying blue ocean strategy principles. Blue ocean strategy-related activities in the sample companies are analyzed for three characteristics: the nature of the analysis that the companies performed, the experience that they went through in applying blue ocean principles, and the effectiveness of the principles they employed. An initial exploratory analysis is reported on 14 companies who agreed to participate by sharing the blue ocean principles they had applied. Qualitative analysis indicates that while the entities involved were quite diversified, their strategic actions with regard to the Eliminate-Reduce-Raise-Create Grid components had similarities. For example, the focus of elimination and reduction actions was on cost components, followed by activities that did not produce good returns. Customer satisfaction-related components and provision of new offerings are the most frequently reported raising and creating actions. This paper reports on initial findings of this work-in-progress research project.

Reference: Zainal Abidin Mohamed. “Analysis of the Use of Blue Ocean Strategy: Case Study Analysis on 14 Different Agencies.” Integration & Dissemination 4 (March 2009): 28-34.
01Aug '08

Planning with Blue Ocean Strategy in the United Arab Emirates

Strategic Change

Theme: Empirical investigation of blue ocean strategy principles in firms of various sizes in the UAE.

Summary: This paper reports on an empirical investigation of blue ocean strategy formulation and implementation. The study employs a large scale survey of randomly sampled managers from small (<100 employees), medium (>100 and <750), and large (>750 employees) companies in the United Arab Emirates, testing seven hypotheses derived from the blue ocean strategy frameworks including the six principles of blue ocean strategy, the four actions framework, and the six paths to creating new market spaces. The analysis shows that there are significant differences between the opinions of managers from small and medium companies, as compared to large multinational enterprises. The authors report that even though multinational corporations are leading rapid diversification in the UAE, small and medium sized companies are more dynamic, able to make quicker decisions and react to market changes, and hold to the primary principles of blue ocean strategy more strongly than large firms. The authors found a negative correlation between the size of the firm and how strongly executives feel that they should look for uncontested market spaces. They also report significant correlation between executives who feel that it is important to open up new and uncontested market spaces and executives who feel that it is important to remain focused on a select few factors in the value chain.

Reference: Butler, Colin. “Planning with Blue Ocean Strategy in the United Arab Emirates.” Strategic Change17 (August 2008): 169–178.
01Feb '09

Blue Ocean Strategies: Should Asia-Pacific Managers Sail in These Waters?

Asia-Pacific Journal of Business Administration

Theme: Editorial describing blue ocean strategy’s significance for Asia Pacific region.

Summary: This editorial suggests that blue ocean strategy offers invaluable lessons for companies in the Asia-Pacific region. Using a quadrant matrix, the authors describe the variability among Asian-Pacific companies’ approaches to strategy along the dimensions of time (past/future) and focus (thinking/acting). The authors plot the strategic concerns of a number of the papers published in the present issue of the journal within this framework. Blue ocean strategy, the authors posit, provides a way to bridge the spaces between the four quadrants and suggest it fills a significant gap in strategic thinking at a time when the traditional arsenals of analytical tools and strategic planning frameworks have lost their luster for companies in the Asia-Pacific region.

Reference: Dufour, Yvon, and P. Steane. "Blue Ocean Strategies: Should Asia-Pacific Managers Sail in These Waters?" Asia-Pacific Journal of Business Administration 1 (2009).
20Sep '11

An Integrated Model of Value Creation Based on the Refined Kano’s Model and the Blue…

Total Quality Management & Business Excellence

Theme: Theoretical integration of blue ocean strategy with Kano’s model for creating customer value, as illustrated by the case of Daiken air conditioners in China.

Summary: This paper argues that a firm can create four types of value for customers: psychological value, creative value, functional value and economic value. The authors attempt to theoretically integrate blue ocean strategy with Kano’s model for assessing quality attributes of an offering to create unique blue ocean value for customers. Kano’s model states that the assessment of value or quality of an offering involves both an objective assessment (as to whether a given quality attribute is fulfilled), as well as a subjective assessment (the customer’s perceived level of satisfaction). Yang (2005) expanded on Kano’s work by taking into account the degree of importance of an attribute as perceived by customers, categorizing value/quality attributes into eight groups: highly attractive, less attractive, high value-added, low value-added, critical, necessary, potential and care-free. Using the practical example of Daiken air conditioners, a leading manufacturer in China, this paper maps the refined Kano categories onto blue ocean strategy’s four actions: eliminating, reducing, raising and creating. The authors suggest that to create unprecedented value for customers, companies should consider eliminating care-free attributes; maintain necessary and less attractive attributes; raise critical, highly attractive, and high value-added quality attributes; and finally create novel integrated quality attributes/ factors.

Reference: Yang, Ching-Chow, and D. Sung. “An Integrated Model of Value Creation Based on the Refined Kano's Model and the Blue Ocean Strategy.” Total Quality Management & Business Excellence, Special Issue: From Value Creation to Customer Satisfaction 22 (2011): 925-940.
01Jan '10

Developing a Convention and Event Management Curriculum in Asia: Using Blue Ocean Strategy and Co-Creation…

Journal of Convention & Event Tourism

Theme: Ex-ante application of blue ocean strategy for developing a degree program in convention and event management in Asia that stands apart from parallel curricula in the West. In so doing, external stakeholders were involved in the blue ocean strategic process to engender buy-in, following the logic of co-creation.

Summary: This paper discusses how the concept of blue ocean strategy was employed in designing the curriculum for a graduate degree program in convention and event management at the School of Hotel and Tourism Management in Hong Kong. The blue ocean strategic process was specifically instituted to address the need for developing a new program curriculum from scratch for Asia, rather than mirroring one of many established degree programs or majors in the West. In doing so, co-creation logic was employed to engender solid buy-in by involving major industry stakeholders, including representatives from corporate meetings, exhibition organizers, service contractors, tourism commission and bureau officials, convention venue operators, hotel sales, and related media. By applying blue ocean strategy in co-creation sessions, academic participants collaborated and shared knowledge with market participants, thereby building strong industry support into the new program. The authors suggest the involvement of the major stakeholders increases the likelihood of success of the program, as it connects customers (hospitality employers) to the program’s ultimate product – its graduates.

Reference: Jones, David L. “Developing a Convention and Event Management Curriculum in Asia: Using Blue Ocean Strategy and Co-Creation with Industry.” Journal of Convention & Event Tourism 11 (2010): 154-158.
01Jan '09

Issues in a Down Economy: Blue Oceans and New Product Development

Journal of Product & Brand Management

Theme: Case study of an ex-ante application of blue ocean strategy to new product development as illustrated by the start-up Clothing Vault.

Summary: This paper provides an ex-ante application of the blue ocean strategy approach to developing new products. The authors discuss the case of Clothing Vault, a start-up that implemented blue ocean strategy for developing its new offering focused on fashion proclivities of teenage girls. The authors suggest that applying blue ocean strategy to product development presents an opportunity for a paradigm shift, noting that while implementing a blue ocean strategy is not easy, the potential learnings from the process can transform the competitive playing field to avoid hazardous competition from incumbents in the industry. However, success requires a mindset that is adaptable and tolerant of change – one not constrained by the past performance or ‘tried and true’ methods. It also requires new analytical tools, like the strategy canvas, to guide selection of product attributes. Finally it requires a great deal of creativity.

Reference: Pitta, Dennis. "Issues in a Down Economy: Blue Oceans and New Product Development.” Journal of Product & Brand Management 18 4 (2009): 292-296.
28Apr '11

Dr. Robot – How Value Innovation Revolutionized the Medical World

Biotechnology Innovation: Doing More with Less

Theme: Case study of Intuitive Surgical’s da Vinci robot from a blue ocean perspective.

Summary: The authors discuss how blue ocean strategy and value innovation logic enable companies to overcome boundaries and create new market spaces. They offer a case analysis of Intuitive Surgical, the company that revolutionized minimally invasive surgery within the specific field of endoscopic surgery, and the medical field in general. Equipping surgeons with 3D-HD visualization, complete dexterity, precision and comfort, Intuitive Surgical’s da Vinci surgical robot was an offering previously unseen by the industry. From a patient perspective, the machine eliminates factors that inhibit recovery time as well as additional compromises and discomforts such as pronounced surgical scars. It raises surgical efficacy and patient outcomes while reducing setbacks associated with traditional laparoscopic surgery, thereby intriguing surgeons and attracting patients regardless of the price. The authors show that Intuitive Surgical was not constrained by the resources it possessed, collaborating with experts from all around the country, including professors from top universities. The authors show how value innovation and the four actions (eliminating, reducing, raising and creating) have proven to be highly effective frameworks for Surgical Intuitive, and further suggest that these techniques can be applied to supplementary and newly-emerging markets for future products and services in the biotechnology sector.

Reference: Crego, Adam. “Dr. Robot - How Value Innovation Revolutionized the Medical World.” In Biotechnology Innovation: Doing More with Less, edited by Lawrence Husick and Ed Addison. Baltimore: Johns Hopkins University, 2011: 96-106.
01Oct '08

The Chaotic Blue Ocean

Review of Business Research

Theme: Theoretical exploration of the relationship between Chaos theory and blue ocean strategy.

Summary: This paper explores the relationship between Chaos theory and blue ocean strategy. The author notes that Chaos theory has proliferated into an array of mathematical problems over the last century with implications for a number of real world problems such as mapping ocean currents or evaluating coronary blood flow. The author argues that change is central to Chaos theory and correspondingly, the only constant for businesses and their environments is that they continue to change. Changes can come both from internal and external sources and can lead to opportunity or disaster for an organization. The author argues that blue ocean strategy allows companies to take advantage of chaos, by outlining a systematic approach to searching for and identifying opportunities, and then capturing them for gain. In mathematical and scientific disciplines, chaotic events that initially appear to be vague and random, when studied with the proper tools, prove to have predictable and controllable features that often yield new insights and allow the observer to solve problems. The study suggests that similarly blue ocean strategy brings a sense of order and understandability to working with chaotic business environments. By providing tools and frameworks such as the six paths framework for reconstructing market boundaries; visualizing strategy with big picture tools; reaching beyond existing demand; realizing value innovation and overcoming organizational hurdles, blue ocean strategy essentially provides a methodology whereby chaos from which opportunities are born that can be developed and cultivated into a new product or service.

Reference: Becker, Hilary M. “The Chaotic Blue Ocean.” Review of Business Research 8 (October 2008): 125-131.
01Jan '08

VIRE: Sailing a Blue Ocean with Value-Innovative Requirements

IEEE Software

Theme: Proposing an alternative software development process that is especially relevant for blue ocean strategy. Illustrated by the successful development of software for the Korean National Tax Service.

Summary: This paper proposes a new framework, called Value-Innovative-Requirements Engineering (VIRE) and suggests that, instead of using the typical software development process, such a framework can be employed for designing and developing software related to creating blue ocean strategies. The authors show that VIRE can be useful for developing a new product for creating a blue ocean market; redefining existing customer requirements and eliciting a new market space; and also for combining two or more existing requirements for dramatically increasing customer value. VIRE involves five steps: the first step sets project goals and uses the strategy canvas as a diagnostic tool to analyze the existing system in conjunction with customer surveys to identify customer value factors; the second step involves using extended surveys that include noncustomers in order to identify new factors that were previously ignored; the third step employs a decision matrix to analyze eliminate-reduce-raise-create options for the new project by prioritizing customer requirements and mapping these requirements to system elements; requirements are redefined in the fourth step and validated in the final step. The authors illustrate the robustness of the VIRE framework by describing its application to the development of the information system for the Korean National Tax service, showing that the system created significant value beyond the project’s original demands.

Reference: Kim, Sangsoo, et al. “VIRE: Sailing a Blue Ocean with Value Innovative Requirements.” IEEE Software 25 (Jan-Feb 2008): 80-87.
09Jul '09

Blue Ocean or Stormy Waters? Buying Nix Check Cashing

Harvard Business Publishing

Theme: Harvard Business School case study evaluating a strategic option for a company aiming to create a blue ocean.

Summary: The study presents the case of Kinecta Federal Credit Union that has the opportunity to purchase Nix Check Cashing as part of their "blue ocean" strategy to reach the financially underserved to increase credit union membership and deposits. However they face reputational as well as financial risk, as check cashing, payday lending, and other alternative financial services are maligned in mainstream financial circles. This case asks students to evaluate both organizations, their respective industries, and the proposed $45 million deal to determine whether or not it makes sense for Kinecta to purchase Nix.

Reference: Tufano, Peter, and A. Ryan. “Blue Ocean or Stormy Waters? Buying Nix Check Cashing.” HBS No. 210-012. Boston: Harvard Business School Publishing, 2009.
01May '10

Systematizing New Value Proposition Through a TRIZ-based Classification of Functional Features

Procedia Engineering

Theme: Analysis of 32 case studies from blue ocean strategy literature that identifies repeatable patterns to systemize the process of building new value curves to create blue oceans.

Summary: This paper attempts to systematize the procedure for constructing new value propositions to create a blue ocean strategy. The authors compare the value curves of 32 selected case studies from blue ocean strategy literature, classifying the reported factors for each case’s strategy canvas into the four actions: eliminating, reducing, raising and creating. Then, based on TRIZ classification of functional features, they categorize these attributes into three main groups: useful functions (UF); harmful functions (HF); and resource consumption mitigating functions (RES). Sub-functional features are also described and statistical analysis is conducted to identify mutual correlations. The authors report a trend of increasing deployment of RES and HFs as eliminating and reducing actions. They also reported an increased focus on raising the UFs that industries had traditionally competed on. No correlation among the newly-created attributes was reported. The authors suggest that this systemization effort is the first of its kind and that future research streams along these lines may be used to identify more prescriptive guidelines.

Reference: Borgianni, Yuri, et al. "Systematizing New Value Proposition through a TRIZ-based classification of Functional Features." Procedia Engineering 9 (2011): 103–118.
01Jul '11

Awareness, Action and Context-Specificity of Blue Ocean Practices in Sales Management

Management Decision

Theme: Empirical testing verifying link between Blue Ocean Strategy and business performance.

Summary: This paper reports on a quantitative investigation exploring the link between business performance and Blue Ocean Strategy. The empirical study conducted involves a 168-respondent survey of CEOs and sales directors of Finnish companies across multiple industries. Cluster analysis and varimax methods are employed for categorizing companies and examining their approach to executing BOS. Linkages to self-reported business performance are also analyzed. The four clusters investigated include companies with a) strategic awareness building orientation, b) customer-specific orientation, c) enforcement orientation and d) non-employment of BOS. The study reports that the enforcement orientation cluster demonstrates superior performance as compared to non-users of BOS and so, the authors conclude that enforcing BOS at the level of action and implementation does pay off. For actualizing these findings into concrete managerial actions, the authors recommend that implementability should be key in making use of BOS; BOS should be managed through pragmatic components of a company’s business model; companies should concentrate on BOS specific implementation skills instead of knowledge; and that they need to establish contextual sensitivity to applying Blue Ocean Strategy.

Reference: Parvinen, P., Aspara, J., Hietanen, J., Kajalo, S. "Awareness, Action and Context- Specificity of Blue Ocean Practices in Sales Management." Management Decision 49 (2011): 1218 – 1234.
01May '12

Identifying the Attributes of Blue Ocean Strategies in Hospitality

International Journal of Contemporary Hospitality Management

Theme: Integration of hospitality management theory and practice with blue ocean strategy concepts.

Summary: This study attempts to integrate hospitality management theory and practice with blue ocean strategy and suggests that blue ocean strategy offers important advantages with regards to company survival in the turbulent business environment of the hotel industry, particularly in Taiwan. Thirty two senior and top managers from 15 international tourist hotel chains in Taiwan were interviewed in this exploratory study to understand the context in which blue ocean strategy could be implemented in the hotel industry. The analysis revealed that hoteliers in Taiwan could create a blue ocean by eliminating travel barriers for visitors to Taiwan and removing constraints on foreign capital investment; reducing in-room equipment and amenities; raising brand awareness, cross-industry strategic alliances and customized travel packages; and creating packages for accompanying cultural tourism, integrating markets among regional hotels and creating a regional brand for the Asia Pacific. On the theoretical side, the authors demonstrate that concepts from customer relationship management (CRM) and network theory can be integrated into the implementation of a blue ocean strategy and indicate that differentiation between lodging offerings and the low cost advantages of hotels can be achieved by incorporating revenue management systems into blue ocean strategy. They also show that the modern hospitality environment calls for greater understanding of the value perceptions of guests in order to create new markets, expand brands, and create strategic alliances.

Reference: Yang, Jen-te. "Identifying the Attributes of Blue Ocean Strategies in Hospitality." International Journal of Contemporary Hospitality Management. 24 (2012): 701-720.
01Jan '12

Finding Uncontested Markets for European Fruit and Vegetables Through Applying the Blue Ocean Strategy

British Food Journal

Theme: Empirical study assessing ex-ante applicability and strength of blue ocean strategy in the highly competitive European fruit and vegetable industry (EFVI).

Summary: This paper reports on an empirical study assessing the ex-ante applicability of blue ocean strategy, the central research question being whether the blue ocean strategy frameworks support the identification of uncontested market spaces in any industry, regardless of how competitive it is. To this end, a two-stage research methodology is applied to the highly competitive European fruit and vegetable industry (EFVI). In the first stage, desk research and interviews were conducted with top executives of the selected case studies, and qualitative primary data was gathered in order to draw an ‘as is’ strategy canvas for the industry. In the second stage, a structured survey, sent to 299 EFVI companies (garnering an 8% response rate), was used to empirically test identification of an untapped market space using blue ocean strategic frameworks, such as the four actions, the six paths, and the strategic sequence of blue ocean strategy. A revolutionary untapped market space named “Youngfruit” is identified ex-ante by focusing on two paths across conventional industry boundaries, namely (path 3) redefining the industry buyer group to target children and teenagers, and (path 1) looking across alternative industries to that of candies/sweets, that children and teenagers prefer to fresh fruits. Combining bite-sized pieces of fresh fruit in attractive packaging with a bonus award system and per-piece pricing, the survey respondents confirm that “Youngfruit” has high potential to make the competition irrelevant. The authors suggest that blue ocean strategy supports thinking beyond industry routines and common knowledge to reinvigorate industry life cycles. They show that blue ocean strategy tools and frameworks enable the derivation of untapped market spaces and provide important insights into changing the rules of the game to set oneself apart from competitors.

Reference: Wubben, Emiel F. M., S. Düsseldorf, and M. H. Batterink. "Finding Uncontested Markets for European Fruit and Vegetables through Applying the Blue Ocean Strategy.” British Food Journal 114 (2012): 248-271.
01Mar '12

E-Learning as a Career Path in Information Systems Curricula: A Blue Ocean Opportunity

American Journal of Business Education

Theme: Applicability of blue ocean strategy in the field of learning and development, as illustrated by the case of curriculum design for Masters of Science in Information Systems (MSIS) programs.

Summary: The authors see emerging career opportunities in the fast-growing e-learning industry as a blue ocean opportunity. They argue that e-learning careers require expertise in business and information technology as well as in instructional design, and that most academic institutions lack cohesive programs that can train a student in all three subject areas. The authors use the strategy canvas as a tool to analyze existing programs on instructional technology, human resources, and information systems and suggest that boundaries can be reconstructed across these three disciplines to capitalize on this blue ocean opportunity. According to the authors, success could be achieved by a nominal curriculum adjustment to the Information Systems (IS) programs. They take up the case of the model curriculum for Masters of Science in Information Systems (MSIS) program (as proposed by Gorgone, 2006) and suggest incorporating e-learning as a career track in the program. They show that an e-learning IS career track can enhance the appeal of the IS major by providing students access to this multi-billion dollar industry, opening the students to additional employment opportunities. In creating a win-win for both the students and the universities offering such programs, a new market space in higher learning is opened up.

Reference: Mills, Robert J., and K. Fadel. "E-Learning as a Career Path in Information Systems Curricula: A Blue Ocean Opportunity." American Journal of Business Education 5 (March-April 2012): 103-114.
01Mar '12

Transforming the Nature and Scope of New Product Development

Journal of Product & Brand Management

Theme: Theoretical discussion integrating blue ocean strategy in the new product development process.

Summary: The authors address the issue of the inordinately high failure rates of new products that only tend to increase as competition intensifies in an industry. They discuss common techniques employed by companies for mitigating failure risk associated with new products, such as line and category extensions that leverage brand equity. They argue that while the new product development process has become more structured and reliable over time, incorporating the voice of the customer, careful market segmentation, differentiation, and gated development stages, these approaches ultimately lead to mere incremental innovations, which still face intense competition. To avoid the competitive morass, the authors propose rethinking the new product development process by incorporating blue ocean strategy and specifically recommend performing a six paths analysis before developing any new product ideas. Combining blue ocean strategy’s six paths and four actions frameworks into a ‘Strategic Opportunity Product Development (SOPD) matrix,’ they attempt to equip product developers with a tool that can be easily integrated early on in process to reduce the risk of failure.

Reference: Pitta, Dennis, and E. Pitta. "Transforming the Nature and Scope of New Product Development." Journal of Product & Brand Management 21 (2012): 35-46.
01Mar '12

Disruptive Product Innovation Strategy: The Case of Portable Digital Music Player

Disruptive Technologies, Innovation and Global Redesign: Emerging Implication

Theme: Case analysis of Apple’s iPod, illustrating how blue ocean tools can be used for strategic innovation.

Summary: The authors note that in today’s business world, many companies are in search of innovative strategies for moving into new markets not yet occupied by fierce competitors. In light of this propensity, many academics and managers attempt to find systematic frameworks for strategic decision making. In this chapter of their book, the authors suggest employing blue ocean strategy frameworks to this end. Using Apple iPod to illustrate their point, the authors posit that blue ocean strategy provides various tools for managers that support their efforts to identify a gap in an existing market and create a truly innovative new market where competition becomes irrelevant.

Reference: Islam, Nazrul, and S. Ozcan. "Disruptive Product Innovation Strategy: The Case of Portable Digital Music Player." In Disruptive Technologies, Innovation and Global Redesign: Emerging Implication, edited by Ndubuisi Ekekwe and Nazrul Islam. Hershey: IGI Global, 2012.
01Apr '12

Sales Forecast by Taking the Concept of Blue Ocean Theory Using MatLab Programming

Journal of Economics and Sustainable Development

Theme: A mathematical rationalization of blue ocean strategy’s profit proposition.

Summary: The authors attempt to build a framework to explain blue ocean strategy’s profit proposition in discretely measurable financial terms. Starting with an analysis of the profit proposition (a fairly high level blue ocean strategy concept), they illustrate how it can be mapped onto financial concepts such as marginal revenues and costs, breakeven analysis, and capital asset pricing models.

Reference: Aswal, Pankaj, and Manish Singh. "Sales Forecast by Taking the Concept of Blue Ocean Theory using MatLab Programming." Journal of Economics and Sustainable Development3 (2012): 1-7.
29Nov '12

The Impact of Blue Ocean Strategy in Low-Cost Transport

Int'l Conference on Traffic and Transportation Engineering

Theme: Applicability of blue ocean strategy theory to air transport illustrated using the case of Ryanair.

Summary: Based on secondary analysis of the low-cost transport market in the European Union, this paper shows how blue ocean strategy can have a significant impact in the low-cost aviation industry. The authors report that the environment is highly competitive and that airline companies as well as regional airports continue to fight for market share and profits. Using the case of Ryanair, the authors illustrate that a cooperative relationship between regional airports and an airline company can enable budget carriers to provide differentiated value for passengers at a low cost to the companies. The authors also suggest that infrastructure development for non-aviation activities at the smaller regional airports might be necessary to enable such relationships.

Reference: Štverková, Hana, M. Červinka, and V. Humlová. "The Impact of Blue Ocean Strategy in Low-cost Transport." In 2012 International Conference on Traffic and Transportation Engineering. Belgrade, November 29-30, 2012.
02Feb '12

Higher Growth Through the Blue Ocean Strategy: Implications for Economic Policy

Science Direct

Theme: Empirical evidence reporting a correlation between blue ocean strategy and rapid growth, using data from 512 fast-growing companies in Slovenia and, as well as an analysis of online retail giant Amazon.

Summary: To stimulate economic growth, many economic policies focus on support to companies of a specific size, generally small and medium enterprises (SMEs), new start-ups, and to specific sectors, such as IT and other high-tech industries. Such policies also incentivize specific activities, such as R&D and technology innovation, and measure success by the number of patents filed and approved. The authors discuss the shortcomings of this approach to policy making and propose another based on blue ocean strategy. The authors empirically test four propositions derived from the blue ocean strategy frameworks, using data from 2007 consisting of 512 companies that satisfy the criterion of extreme growth, known in Slovenia as Gazelles. Their discussion also includes an analysis of swiftly growing online retailer Amazon. The findings provide empirical evidence of a correlation between rapid growth and blue ocean strategy, that in fact all companies that grew fast demonstrated blue ocean strategy, confirming that creating and exploiting new market spaces leads to higher growth. Moreover, the authors also show that fast growth is independent of both company size and industry. Companies achieve high growth through value pioneering (or what Blue Ocean Strategy’s authors call value innovation), not only through technology pioneering. The authors challenge some well-established premises of economic policies and argue that their findings call for a shift in focus to include value innovation, creation of uncontested market spaces, and intra-industry cooperation and collaboration between companies of different sizes.

Reference: Lindič, Jaka, M. Bavdaž, and H. Kovačič. "Higher Growth Through the Blue Ocean Strategy: Implications for Economic Policy." Research Policy 41 (June 2012): 928–938.
01Nov '12

Applying Blue Ocean Strategy to the Foundation of Accountable Care

American Journal of Medical Quality

Theme: Commentary that argues for applying blue ocean strategy to the challenge of redefining health care delivery.

Summary: The authors’ premise is that health care leaders should apply blue ocean strategy to redefine and optimize health care delivery. They note that the current configuration for health care delivery is flawed and that the industry has clearly identified areas of underperformance: overutilization, avoidable readmissions, poor communication, high infection rates, and service fragmentation. They suggest that the strategic imperative for the industry is to anticipate future competitive forces and create new markets. This commentary argues for applying BOS to determine which factors that the industry currently competes on should be eliminated and reduced and which factors should be raised and created to open up new market space and create a leap in health care performance. The article also cites examples of strategic moves like telemedicine programs for behavioural health; single stay rooms, where a patient remains in one room for the entire hospital stay to reduce overall stay and increase patient satisfaction; innovative web-based administration solutions like Hello Health; the prepaid gift card, Highmark, which can be used like a debit card to pay for health-related expenses; and InstyMeds, an ATM-style dispenser of prescription medications as emerging examples of accountable care that have created uncontested market spaces by focusing on new health care consumer demands. The authors suggest that other similar blue ocean strategic moves can be conceived by applying the Four Actions framework to reduce costs while driving up value and creating new demand.

Reference: Welch, Shari J. and B. Edmondson. "Commentary: Applying Blue Ocean Strategy to the Foundation of Accountable Care." American Journal of Medical Quality 27 (2012): 256-257.
01May '09

Blue Ocean Strategy Versus Competitive Strategy: Theory and Evidence

ERIM Report Series Research in Management

Theme: Empirical test of blue ocean strategy versus competitive strategies based on data compiled from 655 retail shops across 41 shop types within the Dutch retailing industry.

Summary: This paper addresses the debate surrounding blue ocean strategy versus competitive strategy. The authors note that blue ocean strategy seeks to turn strategic management on its head by replacing competitive advantage with value innovation as the primary objective, in which firms create consumer demand resulting in increased profitability in the industry. To test the dominance of either strategic school of thought in both the long and short terms, a theoretical model is outlined that posits that as long as there are profits to be had in a particular market, more and more vendors will arrive to serve that market until it reaches a saturation point, where everyone more or less breaks even. Looking at entire industries in this way over time would tell if companies succeed by creating new markets (blue oceans) or pursuing competitive strategies. If companies succeeded by creating new markets that attracted consumers over the long term, industry profits and the number of vendors would both steadily increase. If, however, firm profitability went down as the number of firms went up that would show that companies focused on competition would outperform those setting their sights on the blue oceans. Using a comprehensive data set of the Dutch retail industry comprising of 655 retail shops across 41 shop types analyzed over the period 1982-2000, statistical evidence is brought to bear on this debate to tests the hypotheses. The authors found that average firm profits were positively related to the number of firms in more than half the shop types, whereas profitability and the number of vendors rose and fell together across all shop types over the period spanning indicating that blue ocean strategy was at play over the long term. They also report that in the short term competitive strategy appeared to dominate. The study shows that blue ocean and competitive strategies overlap and managers do not face an either/or decision between the two.

Reference: Burke, Andrew, A. van Stel, and R. Thurik. “Blue Ocean Strategy versus Competitive Strategy: Theory and Evidence.” ERIM Report Series Research in Management (May 2009).

Burke, Andrew, A. van Stel, and R. Thurik. “Blue Ocean Strategy versus Five Forces.” Harvard Business Review 80 (May 2010): 28-29.

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