Critical Review To What Extent This Viewpoint Challenge Conventional Models Of Strategy (Research Paper Sample)

Strategic Management Assignment
Student’s Name
Course
Lecturer
Institution
Date
TABLE OF CONTENTS TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc475647242 \h 3Critical review to What Extent this Viewpoint Challenge Conventional Models of Strategy PAGEREF _Toc475647243 \h 4Is This A State of Business Utopia or Reality? PAGEREF _Toc475647244 \h 8Review of Blue and Red Ocean Concepts PAGEREF _Toc475647245 \h 10Conclusion PAGEREF _Toc475647246 \h 14REFERENCES PAGEREF _Toc475647247 \h 16
STRATEGIC MANAGEMENT
Introduction
Conversion of business models by an organisation plays an important role in creating value as well as in pushing organisations to gain significant increase in sales. It is an aspect that most organisations are willing to take into consideration. By using focused guideline in employing new strategies, an organisation can defend itself from the competitive environment. Further, by providing most animated technique in assessing how flourishing organisations are capable of creating an ideal business environment, alterations that trigger creation of extremely new values through recruitment of new strategy, both blue ocean strategy and competitive strategy draw attention to the significance of avoiding strong competition (Ilham & Mawardi 2016). Basically, strong competition is also known as red oceans. To evade such competitive strategy, there is need to implement some limitation in order to decrease simulations as well as be able to create sustainable competitive advantage in the market. This is only achieved through blue ocean strategy. This report aims to critically evaluate blue ocean strategy and to ascertain the extent to which the notion that BOS provide systematic approach in making competition irrelevant challenges the conventional models of the strategy. Furthermore, the report also aims to ascertain whether the state of the business under BOS is a reality or utopia.
To start with, Blue Ocean Strategy provides a systematic approach to making the competition irrelevant (Kim & Mauborgne, 2006). This is mainly supported by the fact that Kim and Mauborgne (2004) shared the market into two; that is, blue and red oceans. In their strategy, those firms that cultivate the BOS mainly analyse the markets as well as generate new requirement, service and products well-reformed to their customer’s request. On the contrary, red oceans strategy was mainly over-saturated and the solution was to look for such strategy by accommodating blue ocean encounter (Kim & Mauborgne 2004). In this contest, firms would create new market, where competition is said to be non-existence and then irrelevant. In this essence, there is need to critically analyse to what extent this viewpoint challenge the conventional models of strategy.
Critical review to What Extent this Viewpoint Challenge Conventional Models of Strategy
Basically, Kim and Mauborgne (2006) view that BOS provides a systematic approach to making the competition irrelevant challenges conventional models to a greater extent since it seeks to restructure the niche which is currently served by the available products. Therefore, it could be said that the BOS fails to create some new demands, but instead modifies the outline of current demand by apprehending the consumers from diverse openings ((Kim & Mauborgne 2015). For instance, a wine maker could produce wine which looks like cocktails and beer while an airline organisation could devise services which could look the same as a train or car. Thus, a buyer migrating from original offers is mainly captured like the one who derived from unexplored offer. As a result, the chief feature of Blue Ocean is de-segmentation which highly varies from conventional models. In addition, BOS viewpoint challenges conventional models in that its target market is mainly reconstructed by the current affinity on attributes of the value and the value gaps that are identified while targeting particular markets (Malhotra & Seth 2014). Here, the BOS mainly enquiries the established structure and then redefine its scope as the means for creating some differentiation attributes. This could result in emergence of unexplored market. Nonetheless, there is no evidence to support such inference but what is apparent is that value gap usually takes place in practice whenever there is disruption between demand and supply instead of creating an offer. For instance, Subway, a fast food producer utilises emotional appeal in trading up its products which are usually more functional appeal as compared to emotional. Thus, the industry is mainly driven by waiting time and price which are functional not emotional.
Figure 1: Segmentation and De-segmentation of conventional approach and blue ocean approach.
4625340461645003672840345440001328420554990001708150335915003054350335915002268855518795002560320518795002851785518795002268855107886500256032010788650025603201682750002851785107886500116840090043000
438467548895004675505349250049142653238500
59512209779000
1352550324485Target Market0Target Market
Source: Eskandari, Miri & Allahyary (2015).
Further, Blue Ocean Strategy challenges everything including the conventional models of the strategy by providing a systematic approach to make competition irrelevant. This is based on the fact that during establishment of Blue Ocean, the authors observed that organisations incline to participate in a head-to-head rivalry while looking for unrelenting profitable development (Scherer 2007). As a result they end up in Bloody Red Ocean struggling over the lessening profit base as they compete in the current overcrowded industries. In essence, they realise that to get a lasting success, it does not mean battling with competitors but it comes by creating a blue ocean strategy of the untapped new markets ripe for growth. The notion of making competition irrelevant challenges conventional models to a greater extent in that uncontested market has to be developed first before competition is made irrelevant (Srinivasan 2006).
Furthermore, under Blue Ocean, demand is created but not fought for; hence, creating an ample opportunity for growth both rapid and profitable (Becker 2013). For instance, Southwest Airlines is a good example of a fruitful blue ocean strategy implementation whereby Southwest tapped into the client base that in turn preferred or considered driving to the air travel as a result of lower costs. Ideally, instead of rivalling with the other air companies, Southwest placed itself as the alternative to vehicles and provided reduced prices increased flight frequency as well as improved check-in time. This new combination produced an offering which enable clients to benefit from high travelling speeds of the airplane at relatively lower prices combined with flexibility customers travelling by vehicles.
Basically, the viewpoint that BOS makes competition irrelevant via systematic approach challenges conventional models of the strategy to some extent in that competition is made irrelevant as the rules are mainly waiting to be rearranged. Ideally, it challenges conventional models since it mainly describes the deeper and wider potential of the market which is yet to be explored. In addition, Blue Ocean viewpoint challenges conventional models in that the Blue Ocean core objective is to create value by breaking low cost and differentiation trade-off and to align profit proposition and product value (Eskandari, Miri & Allahyary 2015). Further, BOS recognises that the market boundaries only occur in the managers’ viewpoint and thus do not allow the prevailing market place bound their thought (Shukla 2012). Here, Blue Ocean believes that extra demand is largely untapped out there. Nonetheless, the major problem in this case is how to create demand which is largely untapped. This result in a shift of the organisation’s responsiveness from the supply to demand, as well as from rivalry to generating innovation in order to unlock the new demand for their products which is achieved via continuous pursuit of low cost and differentiation.
Generally, under BOS, there is narrowly an unattractive or attractive sector since the stage of appeal could be transformed via the organisations’ meticulous determinations (Nicolas 2011). Furthermore, as the market structure is mainly altered by contravening cost/value trade-off, the rule of the game has also be changed making competition in the older market irrelevant. Therefore, by expanding demand, new wealth is got and such strategy permits organisations to mostly play the non-zero-sum market with high remuneration likelihoods. In essence, by making competition irrelevant a company need to reconstruct its market boundary which is the foremost and first principle in creating BOS. This is achieved via six basic approaches also referred to as the Six Path Framework which challenges conventional model of organisation in the strategy formulation in working within its key boundaries, but break out the known boundaries (Wenzel & Förster 2013). This indeed assists them in moving from Red Ocean to Blue Ocean.
In essence, Blue Ocean is created only by exploring outside the industry boundaries and by breaking out traditional boundaries of the sector in order to unlock the value as shown in Figure 2 below. Generally, Blue Ocean Strategy challenges the conventional model to a greater extent since it entails moving the business from competing within to creating value across new market place. For instance, Subway, a fast food producer utilises emotional appeal in trading up its products which are usually more functional appeal as compared to emotional. Thus, the industry is mainly driven by waiting time and price which are functional not emotional.
Figure 2: Six Path frameworks
Source: Becker (2014).
Is This A State of Business Utopia or Reality?
The state...