How can the Blue Ocean Strategy be applied to the Swatch case? Blue Ocean Theory is a theory in which companies tend to engage in head to head competition in an effort to sustain profitable growth. Swatch group is an international company that deals in the manufacture and sale of Swiss jewelry and watches. The company can take the help of Blue Ocean Theory which suggests that Swatch is better off searching for ways to gain in an uncontested market space than dealing in the traditional market.
Download this Essay in word format. Chan Kim and Renee Mauborgne in After doing detailed research, Kim and Mouborgne found out that most of the companies rely on the market segmentation and price competition for attracting customers. This results in increasing costs, decreasing rewards and creating a Red Ocean where all competitors compete together.
Therefore, in order to maintain the growth, it is necessary that companies go beyond the competition by creating Blue Oceans. They win the game not by competing in the existing market but make the competition irrelevant by focusing on the new market space.
Blue Ocean Strategy does not aim to give an outstanding performance in the existing industry as it is in the case of Red Ocean; in contrast, it focuses on creating a new market space "Blue Ocean" and making the competition irrelevant.
According to Kim and Mauborgne a, p. Success comes not from battling competitors, but from making the competition irrelevant by creating 'blue oceans' of uncontested market space. They came up with this new concept of strategic move after studying strategic moves taken in 30 industries in a period of around years i.
Managers and business executives in all parts of the globe are taking keen interest in this new concept of strategic management and are trying to implement it.
BOS concept that gives the idea of creating and capturing unconcealed space of the whole market is not new. Michael Porter, Professor at the Harvard Business School and an expert in competitive strategies, has always focused on the point that successful strategy means to do things in a different way.
It does not mean to do a strict competition with the other companies where everyone is doing same thing. In other words, it does not mean to swim in those red waters where sharks exists and can harm you. It simply means to go to the blue waters where there are no sharks and therefore no competition.
This concept is even hundreds of years older than Michael Porter's idea and was given by a Chinese General who stated that competition should be avoided in order to do best war.
The Blue Ocean concept is very different from the old Red Ocean concept in which all competitors compete in the market to capture the market share.
The Blue Oceans on the other hand are the uncovered spaces of the markets that are escaped by the competitors. It is a process of simultaneously hunting for differentiation and low costs.
The value innovation also consists of three elements, these include; reconstruction of the elements of value, which means to come up with a new product or service.
The second element is to look across the industry and find new opportunities, instead of using the new product development in the space that is already fill with competitors.
The last element, which is most difficult one, is to create the new demand from non-customers and the new streams of revenue Buisson and Silberzahnp. Six Principles of Blue Ocean Strategy Several companies created Blue Oceans and were very successful but some also failed in accomplishing their objectives.
This is because finding the right choice and making the right strategic move is not an easy task. Therefore, it is risky for every company, no matter big or small, to take such moves.
In order to minimize these risks, Kim and Maubourge have proposed six principles of Blue Ocean Strategy that companies must keep in mind when making such strategic moves for creating Blue Oceans.
From these six principles, the first four are the formulation principles while the remaining two are the execution principles. These are as follows: Companies can reduce the risk of doing search by reconstructing the market boundaries.
Focusing on Big Pictures: Companies should focus on the big picture and not only on the numbers for reducing the planning risk. Reaching Beyond the Existing Demand: Companies can decrease the Scale risk by reaching beyond the existing demand.
Companies should pay special attention and make their strategic sequence right. It will help in reducing the risk of the business model. Companies can reduce their organizational risk by reducing the key organizational problems and difficulties.
Building Execution into Strategy: The managerial risks can be lowered by carefully checking the possibility and probability of success of the strategy by taking concerns of all employees from the very beginning.
Advantage of Blue Ocean Strategy As stated above, Blue Ocean Strategy gives the idea that companies use such methodologies and tools that create new market space Kim et al.
Surprisingly this is also true for the small businesses and enterprises. Despite having a small market size, limited resources and very little global impact, they can also take the advantage from this new strategic management model.
This is because size does not matter at all when making the strategic moves.Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne is a strategy that challenges companies to distance itself away from fierce competition by establishing uncontested market space that makes existing competition irrelevant.
Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. EBay would be a good example of blue ocean strategy. EBay was the first of its kind to initiate a service of online auctions reaching an enormous target market that had never been targeted before in this manner by offering an online.
Blue Ocean Strategy in the Hotel Sector - Bachelor of Arts Onno Hetzke - Bachelor Thesis - Hotel Industry / Catering - Publish your bachelor's or master's thesis, dissertation, term paper or essay. Blue Ocean Strategy Essay Sample. OS, and services. A blue ocean is a place of potential.
A blue ocean can also be created from the red ocean. If an already existing service or product industry can provide other complementary services, they “can create a blue ocean of new market space” (“Complementary Products And Services”, ).
Rehab Hospitals In Ma: The Oldest Outpatient Substance Abuse Treatment Agency, Individualized Treatment! Referring back to the company and product/service you discussed in Units 1 and 2, your identification of the three tiers of non-customers, as well as how the product offers exceptional utility and where it fails to do so, describe the core competencies of the company and how they will be used to achieve a Blue Ocean Strategy.