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A Business Strategy That Could Change The Way We Do Business

A friend and I talked about a unique business strategy over a cup of coffee one afternoon. I was so intrigued by the idea so I did a little bit of research on the subject. This strategy is what is known as the Blue Ocean Strategy. The Blue Ocean Strategy is a corporate strategy that aims to tap unclaimed markets making competition irrelevant. The strategy is embodied in the book entitled "Blue Ocean Strategy" by Professors W. Chan Kim and Renee Mauborgne and Published by Harvard Business School Press.
The authors explained that "Blue Ocean" refers to an untapped market, a market wherein there is only little or no competition at all enabling anyone to claim the market for his own. The opposite of this is "Red Ocean" wherein competition is very high. The market is considered as very crowded already since almost everybody is producing the same type of goods or services.
The Blue Ocean strategy is simply to innovate something; something that makes people give a higher value for a certain product or service. Since doing this would require additional cost, the cost that is incurred by the value added is reduced by eliminating product or service features that the market does not really care about.
To further drive home the point, it is necessary that a Philippine based or a "local" example be given. An example on how the Blue Ocean Strategy was used here in the Philippines can be seen by studying the strategic moves of the Gokongwei group of companies who owns Mobile phone company, Sun Cellular and airline Cebu Pacific among other companies.
The market for mobile phones has already been saturated by both Smart and Globe.Sun Cellular being a new player, did not have much market to start with. In order to survive as a company, what they did was to create a "new market" by adding value to products already found in existing markets. They did this by making calls within their network free. As a result a "new market" has opened. Since majority of the Filipinos are cost conscious, most of them now have two cellular phones or two sim cards in a dual sim phone. One for the other networks and the other one for Sun Cellular.
The Gokongwei owned Cebu Pacific applied the Blue Ocean Strategy by adding "value" to what people really want, which is to "fly." In order to do this, airline fares must go down since this is what people care about. So Cebu Pacific slashed down their fares to give value to what people really want. In order to make up for this loss, they eliminated other costs such as newspapers a hot meal or a snack. This move, caused people to buy into this "new market."
Blue Ocean Strategist resort to "Strategic thinking" rather than "Strategic planning." Adding "value" to products and services to claim an untapped market is what is resorted to instead of referring to it as "cutting prices" to capture a market. Its not about "crushing the competition" but rather its about "Creating new markets with little or no competition."
Critiques may say that the Strategy has already existed a long time ago and that principles that are said to be unique to the strategy can be found in other traditional business strategies as well.
The critic's arguments are not valid at all since our way of discovering something is built upon the knowledge that has been universally accepted by the majority. A new theory is always built upon something that has already been long time accepted as a scientific principle or even theory. (Just like the theory of relativity rest upon the foundations of the principles of thermodynamics, electricity, gravity etc.) Whatever the Critics have to say, the strategy certainly is here to stay and is sure to have an effect on the way future entrepreneurs, managers and leaders will think and do business in the years to come.
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