Blue Ocean Strategy: Innovation for Market Success

This report explores the concept of Blue Ocean Strategy, a market approach that aims to create uncontested market space and reduce competition. It discusses the theory, process, and evaluation of Blue Ocean Strategy, as well as its application in the historical development of Deliveroo, a successful online food delivery company. The report also highlights the benefits and limitations of this innovative approach to business.

Management Innovation
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Innovation Theory.......................................................................................................................3
The five step process of Blue ocean strategy...............................................................................6
Evaluation of the theory (Benefits and limitations).....................................................................6
Company background..................................................................................................................8
Historical Development...............................................................................................................9
Application of the Blue ocean Innovation Theory in the historical development context........10
Future Development..................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Most of the firm are involved into competition as well as struggling for market share, brand
differentiation and others. So, it is important for them to perform innovation continuously for
dealing with its competitors. Innovation is considered as process of performing changes into
existing things which are already developed through launching new things. Moreover, it is whole
about assisting firm development that involves practices like managing ideas, finding objectives
as well as encouraging team members (Aarikka-Stenroos and et. al., 2017). It is applicable to
enterprises for enhancing the effectualness of productivity or services. Since 19 th period mid,
creativity appeared in scientific research area. Also since 20 th ordinal half the concepts of
creation started to dispersed around several areas of information. Also, various concepts of
innovation initiated to innovate such as disruptive innovation, Blue ocean innovation and other.
In this report the focus will be Blue ocean strategy; it is define as a market for goods in which
there is not any competition or very less. Its main aim is to capture new demand as well as
develop competition irrelevant through introducing a product with effective features. The
covered in this report are blue ocean theory principal, process along with its evaluation.
Moreover, application of blue ocean theory into historical and future development is also
discussed in this report.
MAIN BODY
Innovation Theory
The concept of Blue ocean theory is helpful in identifying new gaps into marketplace. This
means reducing competition as well as developing an open market space. It aims to avoid Red
oceans with various similar competitors and lower profit and also it may be determined with
strategic canvas. Undertaking a new strategy that is canvas for obviating red ocean strategy for
existent marketplace as well as intent to beat rivals and use the current petition (Biemans, 2018).
So, respective strategy develops uncontested market and aim to create competition that is
ineffective through developing new demand. By focusing upon creating competition irrelevant
there are some aspects that Blue ocean strategy requires to evidence. In case firm acts in
favourable way in minimising the cost will enhance purchase value and ultimately will develop a
valuable innovation.
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Blue ocean strategy is to concentrate upon reconstructing the marketplace, seeking at large
picture and reach beyond of what consumers are presently demanding. It categorised them
strategy by concentrating upon strategy canvas characteristics (Etzkowitz and Zhou, 2017).
Performing on 4 frameworks that is reduce standard factors within sector, obviate factors which
are assumed, develop opportunities the sector that have not facilitated before and increase
standards that are above sector.
As per Chan and Mauborgne 2016, valuable innovation is helpful to developed into well-
known places within firm’s practices that affirmatively affect organisation’s cost structure and
their consumer’s feedback. For instance, cost saving method is effective in eradicating several
elements that rise into industry that are not provided. As time goes on, prices are minimised
under economies of scale that is concerned with higher volume of sales which produced value.
Effective blue ocean schemes obligatory about reducing business risk not taking the risk (Kim,
Mauborhne, 2015).
Figure 1. The cornerstone of Blue Ocean Strategy
(Source: Google scholar, 2020)
The Strategy Canvas Framework Tool
This tool is considered to be an activity as well as analytical model for developing a
strong blue ocean strategy. Identifying the exact state into market area, it will enable an effective
acknowledgement of competitors, factors which firm compete upon their product or services.
Seeking in what consumer receives from present rivals.
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Figure 2, Blue Ocean Tools and Strategy
(Source: BLUE OCEAN STRATEGY & SHIFT TOOLS. 2020)
The Four action Frameworks
The main intent of this framework is to redevelop the factors of customer’s value in
forming a new valuable curve. There are about four main questions which challenges the
business models that are discussed below:
Figure 3, Four action framework.
(Source: Blue Ocean – more success with the right strategy, 2020)
 Eliminate: The cause is that business considers for acknowledge should be obviated.
 Raise: The cause required to be enhanced effectively above industry needs.
 Reduce: The reasons are needed to be low below firms standards.
 Create: The reason must be formed which industry have never facilitated.
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The five step process of Blue ocean strategy
This process are provides for systematically re develop and states how Blue ocean Initiatives
may be effectively introduced into firms (Tidd and Bessant, 2018). All steps are:
 Re-develop market boundaries: In Blue ocean strategy, firm at first should re- evaluate
the places which develop their industry conceptions as well as shape organisational
business model .
 Concentrate upon a big picture: The Company always have to keep eye upon whole view
as well as do not lost into statistics much.
 Reach beyond existent demand: Business naturally concentrates upon present consumers.
So, they always have to concentrate on potential future client.
 Obtain strategic sequence right: At this step, the firm implement its strategy sequentially
to attain its value innovation.
 Overcome key hurdles of firm: The effective implementation of demands which the firm
should solve internal differences among departmental.
 Form implementation in strategy: In this, firm have to minimise its management risk
through incorporating Blue ocean execution into its continuous method.
Evaluation of the theory (Benefits and limitations)
The blue Ocean theory has some benefits as well as limitation that are discussed below:
Benefits of Blue ocean strategy
 This assists firms in identifying a new immature as well as unsaturated marketplace.
Unsaturated market provide competition free atmosphere to firms.
 This aids organisation to get rid of cut throat competition into existent sector through
regular value addition into manufacturing procedures.
 Respective strategies alter the fundamental mind set of person. This change mental
perception as well as helps in finding opportunities.
 Blue ocean strategy comply principle of utilising strategically proven approach rather
than raw theories.
 Value innovation is considered as blue ocean strategy core principle. It combines the
factors of lower cost leadership as well as product differentiation strategy. This provides
competitive sustainable benefits to firm.
Limitation of Blue ocean strategy
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 This is very difficult to identify unique ideas with higher growth potential in upcoming
times and it also tough to determine a marketplace which is not tapped through firms.
 New market development is very difficult as a firm have to form a comprehensive plan
with regards to potential clients as well as process to effectively trained those regarding
new products, ideas, and solutions. Organisation must have clear knowledge about trade
off, human capital and barriers.
 Entering in ne marketplace with bad times is high prone towards risk. Firm needs to
check that arrival is not so much early. Early arrival into marketplace outcomes into
failure. Technology must be advanced enough for clarifying the intent of products or
services developed through organisation.
 Growth of profitable blue ocean strategy is subsequent of extended analysis as well as
investigation. This does not come up through any magic or miracle. It is so much risky to
spend heavy amount upon new market chasing.
Analyse:
This is very important to determine this aspect into market area that is related with their
application as well as uses into firms. Thus, according to their benefits and limitations, the
strategy could be used in effectual as well as efficient way for creating sort of monopoly into
market area. It is attained because of analysis of market space which could be accomplished
through developing new products that creates competition irrelevant (Frow and et. al. 2015).
Also, other aspects associated to their application is that, strategy is formed through organisation
into respective theory should be effective in respect to assists them in obtaining higher
profitability. It could be attained through communicating the products innovation which is sold
through firm in their targeted marketplace.
Therefore, based on above, Blue ocean strategy is considered to be the very effectual for
assuring that an experienced as well as very much competitive position is developed through
organisational products or services (Prokopand Stejskal, 2017). Moreover, this also assists to
obtain a proper market status which could be attained through development of new and
innovative demand into market area. Though, it is essential for firm to initially examine the
whole marketplace to identify gaps for which demand could be formed.
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Company background
Deliveroo is a well known online food delivery firm which based in London, England. It
was developed in year 2013 by Will Shu and Greg Orlowski. It performs in about 200 cities
across UK, France, Spain and many more. They mainly concentrates upon creating a network o
ghost kitchen which means that kitchen placed off site from restaurants for preparing the delivery
meals only. There are approx 13, 000 staff who are performing into respective company as well
as assist in business operation for making its successful. It mission is to transform the way, the
whole world thinks about takeaway. They brought technology collaborative with world’s lovable
restaurants for getting higher quality restaurant food to client in faster manner (Nohria, 2017). In
about 32 minutes they deliver the foods to customers as it riders are self – employed cyclist and
motorcyclist that brings the like of Gourmet burger Kitchen, MEAT liquor and others to
consumers’ offices as well as homes. The model is effective for all: Clients obtain higher quality
food delivered to them in quickly and fastly way. Moreover, restaurant which does not mainly
provides takeaway may enhance revenues by or above 30%. Also, the riders enjoy well paid as
well as flexible work (The Deliveroo Business Model – How Does Deliveroo Work & Make
Money. 2020).
The respective organisation utilised the Business Canvas model, it is considered as a
template which is applied through enterprises for developing its existent business model. This is
a chart which shows visually as well as it has 9 elements (Griesar, 2018). So, the Business
Canvas model for Deliveroo is discussed below:
Key Partnerships
Riders as
collaborations,
Higher quality
local restaurant
network,
Technology
facilitator.
Key Activities
Facility fast
delivery
services,
International
expansion and
practices,
Logistics
procedures
optimisation.
Value
Propositions
To bring world’s
local restaurants
into every people
office and homes.
Customer
Relationships
Fast delivery
directly to home
or offices, Digital
as well as online
experiences, order
standard quality
takeaway online
from top
restaurants.
Customer
Segments
Premium
restaurants,
customers who
ask for take away,
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Key Resources
Delivery
member with it
own vehicles,
Human resource
in form of
managers,
engineers
analyst etc.,
Food delivery
culture.
Channels
Social media,
Websites, mobile
application and
others.
Cost Structure
Marketing expenditures, Internal salaries,
drivers cost who registered themselves as
freelancers, platform development as well as
maintenance, Automation.
Revenue Streams
Commission which is charged from every
restaurants for a single order.
Delivery Plus( monthly subscription cost for
food delivery).
Historical Development
Deliveroo is a British online food distribution company. Since it introduced their services
Into London’s Chelsea with 2 restaurants in year 2013, the firm had experienced effective
development as well as rapid global expansion. Moreover, it is introduced in Brighton their first
city which is outside the London in year 2014. In 2015, they have undertaken services to more
cities within United Kingdom and others. The framework that respective firm utilise is crowd
funding and peer to peer. It assumed an estimated figure of about 6 million customers before
year 2018 end. Within UK, they formed about 7, 200 jobs as well as contributes around 372
million in fiscal year 2016-17. Moreover, internationally it performs with various partners among
UK and also outside it (The Deliveroo Business Model – How Does Deliveroo Work & Make
Money. 2020).
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Application of the Blue ocean Innovation Theory in the historical development context
Now a days the food supply sector has raising and this still performing effectively for doing
so. As in 21st century, both ordering and eating out has become a key trend of human life. Since,
Deliveroo is introduced in year 2013 and has been considered as a successful Britain’s start- up.
Also, have managed to become a tough competitor within respective industry, holding their own
against some popular brands like Uber eats, rub hub and others. In last few years, they have
increased £ about 480 million as well as enhancing and targeted about £ 2 million. Currently, its
concepts were rewarded with an investment from Amazon and it become is third largest food
service along with take away in UK. The global business played a main role into their
development as with an increase of 99% into Europe as well as 204% into another marketplace
that so outside the UK. It is the largest European market within France in which they registers
about 20, 000 daily consumers. In year June, 2018, it introduced the platform of around 5000 to
restaurants of UK which desires to utilise its own shipping drivers. Instead of this, it also own
approx 15, 000 rider’s network and it enhanced to accomplish the amount of UK’s restaurant
platform by 50%. Moreover, its courier fleet is around 15, 000 powerful into UK and they may
be the fastest developing. Currently, food delivery application has become more popular. As per
the study performed by Global Web Index, about 11% of takeaway enthusiasts within U.S. As
well as around 3% into UK utilised a services of regular food supply. Within year 2018,
respective organisation launches a virtual market of food that allows customers to place order in
a single transactions along with several restaurants (Deliveroo Revenue and Usage Statistics (2020),
2020).
The Strategy Curve
The strategy canvas is stated as tool which visually represent that how a firm has
developed blue ocean strategy. This is generally utilised for ploting that how the present
competitors compete within market space, what aspects it compete on as well as how its firm and
the scores of competition upon every key factors (Johnson, 2016). So, a random graph is shown
below related to this:
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The four action frame work
The four action framework is considered as a strategic tool which is utilised for
reconstructing the value of consumer’s elements (Kim, 2015). It is a core strategic tools that is
applied in Blue ocean strategy and this was developed through Prof. W. Chan Kim and Renee
Mauborgne. So, Deliveroo applied the four action framework as this helps them to eliminate
trade off between differentiation and low cost by analysis which aspects is reducing, creating,
raising and eliminating.
REDUCE CREATE
 Waiting time.
 Cost of transportation as
delivery is done through rider
directly to customers..
 Driver training.
 More restaurant partners.
 Health and safety.
RAISE ELIMINATE
 Food cost as delivery charges
also included.
 In time delivery.
 Advanced technology
 Technical malfunctions.
 Disputes.
 Late delivery.
Future Development
Deliveroo is a becoming a leader in food supply industry. as Deliveroo is leading rapidly
into food delivery market so it’s time to seek further for securing business as well as obtain
competitive edge fro effectiveness of enterprises. Based on the analysis, about 28% British
customers have been maximised as compare to last year who generally prefer food delivery and
approx 27 million orders were taken in last 6 months. For the future development they plan to
supply natural ingredients to its partner’s restaurants. According to them, fresh food procurement
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arm allows restaurants to buy ingredients as well as supply through Deliveroo at an effective
price. This decision is based if they received some investment from Amazon for becoming a one
stop restaurant shops. As through this restaurants can able to save above 20 % on its ingredients
bills while small autonomous outlets may save up to 40% by new food procurement platform.
Also, this system will increase low restaurants economies of scale through buying goods on
behalf of various restaurants likely it enhance its buying authority at the time of suppliers
negotiations. For instance, they are planning to utilise drones for deliveries. As through utilising
this, they might able to save delivery time as well as hot food items and fresh ingredients could
be delivering within 5 to 10 minutes rather than 30. Moreover, the consumer will be satisfied
while receiving order at particular time when they required (Manzini, 2015). Therefore, after
using the drone delivery techniques Deliveroo strategy canvas may be like this:
Moreover, the four action framework after using drone delivery will be:
REDUCE CREATE
 Expenses in food delivery get
reduce.
 Waiting time as well as business
cost also gets minimised.
 This develops new food
delivery trends.
 New partners in context of
restaurants.
RAISE ELIMINATE
 This system enhances food
quality as hot and fresh items get
delivered.
 Global expansion.
 Customer support.
 It removes transportation cost.
 Late delivery.
 Pollution.
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CONCLUSION
As per the above report, it has been concluded that managing innovation is essential into
firm for assuring differentiation as well as effective status into marketplace. Moreover, it is vital
to obtain a competitive and market position which is related with industry and into market area.
Blue ocean theory is helpful in identifying new gaps into marketplace. This means reducing
competition as well as developing an open market space. It aims to avoid Red oceans with
various similar competitors and lower profit and also it may be determined with strategic canvas.
This is vital that blue ocean strategy is determine and described with their techniques and
procedures for gaining effective knowledge for same. In addition to this, it is important that firm
and its product or services are discussed in respect of blue ocean strategy that could shows
historical development of their offerings. This also assists to obtain a proper market status which
could be attained through development of new and innovative demand into market area. Also,
their application should be utilised for future development and effectual goods for organisation
to attain its objective.
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REFERENCES
Books and Journals
Aarikka-Stenroos, L. and et. al., 2017. How to manage innovation processes in extensive
networks: A longitudinal study. Industrial Marketing Management. 67. pp.88-105.
Biemans, W., 2018. Managing innovation within networks. Routledge.
Etzkowitz, H. and Zhou, C., 2017. The triple helix: University–industry–government innovation
and entrepreneurship. Routledge.
Frow, P., and et. al. 2015. Managing co‐creation design: A strategic approach to innovation.
British Journal of Management. 26(3). pp.463-483.
Griesar, K., 2018. The Recipe for Corporate Longevity: From the Perspective of “Managing
Innovation”. Angewandte Chemie International Edition. 57(16). pp.4130-4142.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Kim W.C., and Mauborgne R., 2015. Blue Ocean Strategy: How to Create Uncontested Market
Space and Make Competition Irrelevant // Harvard Business Press
Manzini, E., 2015. Design, when everybody designs: An introduction to design for social
innovation. MIT press.
Nohria, N., 2017. Fast forward: The best ideas on managing business change. Business Review.
9. p.10.
Prokop, V. and Stejskal, J., 2017. Different approaches to managing innovation activities: An
analysis of strong, moderate, and modest innovators. Inžinerine Ekonomika/Engineering
Economics, volume 28, issue: 1.
Tidd, J. and Bessant, J. R., 2018. Managing innovation: integrating technological, market and
organizational change. John Wiley & Sons.
Online
BLUE OCEAN STRATEGY & SHIFT TOOLS. 2020. [Online]. Available Through:<
https://www.blueoceanstrategy.com/tools/strategy-canvas/ >
Blue Ocean – more success with the right strategy. 2020. [Online]. Available Through:<
https://www.ionos.com/startupguide/get-started/blue-ocean-strategy/ >
Deliveroo Revenue and Usage Statistics (2020). 2020. [Online]. Available Through:<
https://www.businessofapps.com/data/deliveroo-statistics/>
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The Deliveroo Business Model – How Does Deliveroo Work & Make Money. 2020. [Online].
Available through:< https://productmint.com/the-deliveroo-business-model-how-does-deliveroo-
work-make-money/>
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