source: http://www.ibscdc.org/blue-ocean-strategy-case-studies.asp
Successful businesses are either low-cost providers or niche players - thus says Michael Porter. However, many have opposed this idea and claim that it is flawed. For instance, Charles W. L. Hill, an educator, in 1988, proposed that a combination of differentiation and low-cost might be helpful for firms to achieve a sustainable competitive advantage and claimed that Porter's model was flawed because differentiation can be a means for firms to achieve low cost. Swedish educators Jonas Ridderstråle and Kjell Nordström, on the other hand, in their 1999 book Funky Business, follow a similar line of reasoning. They argue that 'Competitive Strategy is the route to nowhere' and that firms need to create 'Sensational Strategies' which is about playing a different game.
A similar strategy proposed by W. Chan Kim and Renée Mauborgne of INSEAD, is the 'Blue Ocean Strategy', which promotes creating 'Blue Ocean' or new market space rather than competing in an existing industry. It is in many ways similar to the ideas presented in Funky Business. For example, the 'competing factors' of the Blue Ocean Strategy are similar to the definition of 'finite and infinite dimensions' defined in Funky Business. Kim and Mauborgne claim that their strategy makes sense where supply exceeds demand. Once a blue ocean is created, it eventually turns 'red' over a period of time and ceases to guarantee success.
Red Ocean is the known market place (or industries), for which industry boundaries are defined and accepted, and the competitive rules of the game are known. Companies, here, try to outperform their rivals to grab a greater share of product or service demand. Profits and growth are reduced as the market space gets crowded. Products become commodities or niche with cutthroat competition turning the ocean red. Hence, the term red ocean gets coined. Blue oceans, in contrast, denote a non-existent industry or an unknown market space, where competition and demand is created rather than fought over. Competition, here, is irrelevant because the rules of the market are not set and there is ample opportunity for rapid growth and profitability. However, the corner-stone of Blue Ocean Strategy is 'Value Innovation', either in product, service or delivery, which creates value (not found in the current market) simultaneously for the buyer and the company.
I needed to explain the concept of 'Blue Ocean Strategy' in my class and was in search of some live examples that would demonstrate the above differences. With some search on the internet, I found many sites that explained the concept in detail but did not have examples. However, in the process I landed up in a website named www.ibscdc.org, where I got what I was looking for. The site contained quite a few case studies that demonstrated the concept with real life business examples. IBSCDC offered case studies like - Utility Computing: IBM On-demand, which demonstrated the introduction of a new concept called 'utility computing' in the IT industry by IBM; Toyota's hybrid vehicles which helped in creation of a new market space for the company in the US; the case study of Tivo which pioneered the concept of interactive television and gave rise to a whole new industry.
However, the web site was easy to browse - across pages, with clear categorization of the case studies and tabs that took the user to the list of related case studies that the user needs. Moreover, a click on the title of the case study presented a well written abstract and other details needed by the user. It offers a huge collection of case studies related to various topics like business strategy, entrepreneurship, finance, economics, operations management, corporate governance, HR, organizational behavior, marketing, international trade, CSR, etc.
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Successful businesses are either low-cost providers or niche players - thus says Michael Porter. However, many have opposed this idea and claim that it is flawed. For instance, Charles W. L. Hill, an educator, in 1988, proposed that a combination of differentiation and low-cost might be helpful for firms to achieve a sustainable competitive advantage and claimed that Porter's model was flawed because differentiation can be a means for firms to achieve low cost. Swedish educators Jonas Ridderstråle and Kjell Nordström, on the other hand, in their 1999 book Funky Business, follow a similar line of reasoning. They argue that 'Competitive Strategy is the route to nowhere' and that firms need to create 'Sensational Strategies' which is about playing a different game.
A similar strategy proposed by W. Chan Kim and Renée Mauborgne of INSEAD, is the 'Blue Ocean Strategy', which promotes creating 'Blue Ocean' or new market space rather than competing in an existing industry. It is in many ways similar to the ideas presented in Funky Business. For example, the 'competing factors' of the Blue Ocean Strategy are similar to the definition of 'finite and infinite dimensions' defined in Funky Business. Kim and Mauborgne claim that their strategy makes sense where supply exceeds demand. Once a blue ocean is created, it eventually turns 'red' over a period of time and ceases to guarantee success.
Red Ocean is the known market place (or industries), for which industry boundaries are defined and accepted, and the competitive rules of the game are known. Companies, here, try to outperform their rivals to grab a greater share of product or service demand. Profits and growth are reduced as the market space gets crowded. Products become commodities or niche with cutthroat competition turning the ocean red. Hence, the term red ocean gets coined. Blue oceans, in contrast, denote a non-existent industry or an unknown market space, where competition and demand is created rather than fought over. Competition, here, is irrelevant because the rules of the market are not set and there is ample opportunity for rapid growth and profitability. However, the corner-stone of Blue Ocean Strategy is 'Value Innovation', either in product, service or delivery, which creates value (not found in the current market) simultaneously for the buyer and the company.
I needed to explain the concept of 'Blue Ocean Strategy' in my class and was in search of some live examples that would demonstrate the above differences. With some search on the internet, I found many sites that explained the concept in detail but did not have examples. However, in the process I landed up in a website named www.ibscdc.org, where I got what I was looking for. The site contained quite a few case studies that demonstrated the concept with real life business examples. IBSCDC offered case studies like - Utility Computing: IBM On-demand, which demonstrated the introduction of a new concept called 'utility computing' in the IT industry by IBM; Toyota's hybrid vehicles which helped in creation of a new market space for the company in the US; the case study of Tivo which pioneered the concept of interactive television and gave rise to a whole new industry.
However, the web site was easy to browse - across pages, with clear categorization of the case studies and tabs that took the user to the list of related case studies that the user needs. Moreover, a click on the title of the case study presented a well written abstract and other details needed by the user. It offers a huge collection of case studies related to various topics like business strategy, entrepreneurship, finance, economics, operations management, corporate governance, HR, organizational behavior, marketing, international trade, CSR, etc.
About the Author IBSCDC, with well over 2700 case studies, 700 structured assignments and 900 teaching notes, is Asia Pacific's largest repository of business management case studies. All these case studies are developed for MBA programs, Executive MBA programs, Executive Development Programs, and other management-related programs and allied disciplines
6 comments:
In their book Blue Ocean Strategy, Kim & Mauborgne explain distinctive marketplaces as “red oceans,” whose people cleave each other separately in a frantic fight back for market share, discoloration the ocean red with their blood.
Nice article and informative as well. for few of people like me this article is really helpful.
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