Managing Innovation: Blue Ocean Strategy and its Application in Companies

MANAGING INNOVATION

Table of Contents
PART 1.............................................................................................................................................3
1 Blue ocean strategy..................................................................................................................3
PART 2.............................................................................................................................................6
2 Application and implementation of blue ocean strategy in the company................................6
REFERENCES..............................................................................................................................13

PART 1
1 Blue ocean strategy
Definition: Blue ocean strategy refers to move in the direction where there is a less
chances of competition and little to no competition. It shows and refers solutions of problems of
customers in a way that none other does. It creates uncontested market space which makes the
competition irrelevant.
There are some elements of this strategy which can be used by many companies in order
to future innovation. Elements of this strategies are: to pursue low cost, empower through tools
and framework and minimize risks and maximize opportunities.
Meaning: Blue ocean strategy is a method and process of creating business strategy of
the company. This strategy is generally is based on the idea by which every type of company can
achieve the higher profits by expanding and creating its new demand for its products on non-
competitive and less competitive market (Biemans, 2018). The main aim of choosing this
strategy is to create new and potential customers value by decreasing costs and providing
satisfactory products and services.
Background details: This strategy was published in 2005 in a book by W. Chan Kim and
Renee Mauborgne. This strategy and method include the methodology of creating of value
innovation by using new market space for the demand. This strategy is depending and rely on the
innovation and creative approaches.
Uses of strategy: Nowadays most of the companies are operating under intense
competition and try to do every possible thing in order to gain market shares. This type of
situations happens when an organisation operates in a saturated market which is also called a red
ocean. In order to ensure this type of situations many companies use blue ocean strategy. This
strategy exists and can be used when there is a potential for the higher profits and where is less
competition or may be irrelevant competition (Van Lancker, Wauters and Van Huylenbroeck,
2016).
Examples of successfulness of this strategy
Most of the companies can take advantage of this strategy by introducing its products
with superior characteristics and features in order to create new demand and also for making

competition irrelevant. For example, Apple company launched its new product iTunes by which
users can easily download high quality music at affordable and reasonable price. It has launched
its new products at affordable prices that helps the company in creating the potential demand.
Another company which uses blue ocean strategy is Ford motor co. as it introduced its T
model as the car for the masses. This was in only single colour and 1 model but it was durable,
affordable and reliable. At the same time this auto mobile industry was in its infancy with almost
500 auto makers that produce custom made cars which were very expensive and less durable and
reliable (Talukder, 2016). This company then created a new process of manufacturing its mass-
producing cars. The T model got success and gain market share from 9% to 61% from 1908 to
1921.
Blue ocean creates uncontested market space and also makes the competition irrelevant.
It also creates and capture the new demands for companies. It also helps in innovating products
and value.
There are some key points and elements which support blue ocean strategy which are as follows:
Pursue differentiation and low cost: The main important feature and supporting
element of this strategy is it creates differentiation. The main aim of that type of business is to
provide value to their customers at affordable prices.
Empowers through framework and tools: This strategy also helps to link
systematically with value and focuses on reconstructing boundaries. It also provides different
data driven tools and framework which provide visual guidance to companies which is beneficial
for them for pursuing its value innovation. With the help of this tools of blue ocean strategy
companies can guide and helps their customers. The tools and frame work which this strategy
provides are 4 actions framework, 6 path form and strategy canvas that help the company in
creating and innovating uncontested market space. Six path frameworks are a tool that are used
in this strategy in order to break from competition. The importance of 4 action framework is it
reduces the risk in the path of developing the business.
Step-by-step process: The main feature of using this strategy is it provides each details
and guidance or step by step process. By following this step, the company can make incremental
improvement. This strategy provides mainly 4 steps process to the company in order to break
away from the competition and for creating a profitable growth (Mi, 2015). Step1 overseeing