Strategic Management – MGT 451: Midterm Exam Your Midterm

Strategic Management – MGT 451: Mid-term Exam Your mid-term exam’s deliverable is a written report addressing the question: What is Blue Ocean Strategy (BOS)?

Construct a comprehensive 12 to 15-page academic report on Blue Ocean Strategy (BOS) synthesizing scholarly perspectives, primarily from W. Chan Kim and Renée Mauborgne, as well as your own analytical insights. Your report should include a cover page, table of contents, main body divided into focused sections addressing specific aspects of BOS, and an appendix for visuals and additional materials. Ensure proper academic formatting, clear structure, double spacing, Times New Roman 12pt font, and 0.5-inch margins.

The report must systematically cover the following topics:

1. Creating Blue Oceans: Define red and blue oceans, explain why blue oceans are critical, and discuss strategies firms can use to create blue oceans.
2. Blue Ocean Principles: Describe the core ideas underpinning BOS and highlight how these principles differ from conventional competitive strategies.
3. The Concept of Value Innovation: Clarify what value innovation entails, why it is essential for business success, and how firms adopt it to maintain competitiveness.
4. The Six Paths to Reconstruct Market Boundaries: Explain how firms can reconstruct their market environment and the importance of evaluating these six paths for strategic success.
5. Frameworks & Tools for Blue Ocean Strategy: Select three tools from the list below and analyze each in terms of purpose, information needed, limitations, and visual representation:
   • Strategy Canvas
   • Four Actions Framework
   • ERRC Grid
   • Visualizing Strategy
   • Pioneer Migrator Settler Map
   • Three Tiers of Noncustomers
   • Sequence of Blue Ocean Strategy
   • Buyer Utility Map
   • Price Corridor of the Mass
   • Four Hurdles to Strategy Execution
   • Tipping Point Leadership
   • Fair Process
6. Lessons Learned: Reflect on your insights regarding BOS, how your views have evolved, and identify the most surprising aspect discovered during your research.

Support your discussion with at least 10 credible scholarly references, citing sources appropriately within the text. Incorporate relevant tables, diagrams, and charts, either within the body or as annexes, referencing them properly. Proofread your submission for clarity, coherence, and academic quality, and ensure originality to avoid plagiarism. Submit a printed copy during class and an electronic version via email by the deadline, Tuesday, October 17.

Paper For Above instruction

Blue Ocean Strategy (BOS), developed by W. Chan Kim and Renée Mauborgne, presents a pioneering approach to strategic management that emphasizes creating uncontested market spaces rather than competing in crowded industries. Unlike traditional strategies focused on outperforming rivals within existing market boundaries, BOS advocates for value innovation to unlock new demand and make competition irrelevant (Kim & Mauborgne, 2005). This paper explores the core principles, tools, and applications of BOS, providing a structured analysis of how organizations can strategically reconstruct market boundaries to foster sustainable growth.

Creating Blue Oceans: The Paradigm Shift from Red to Blue

The concept of red and blue oceans encompasses the competitive landscape metaphor where red oceans symbolize markets saturated with fierce competition, resulting in shrinking profits and margins. In contrast, blue oceans represent untapped market spaces devoid of competition, characterized by high growth potential (Kim & Mauborgne, 2005). Creating blue oceans involves innovative thinking that shifts focus from outperforming rivals to reconstructing market boundaries, often through the pursuit of differentiation and cost leadership simultaneously. Strategies such as value innovation enable firms to redefine industry parameters, create new demand, and establish a unique value proposition that attracts a broad customer base (Kim & Mauborgne, 2014).

Fundamental Principles of Blue Ocean Strategy

The foundational principles of BOS revolve around reconstructing market boundaries and focusing on the big picture rather than incremental improvements. Key ideas include the four actions framework, which asks: eliminate, reduce, raise, and create, to challenge industry assumptions and innovate value to consumers (Kim & Mauborgne, 2005). Unlike Porter’s competitive positioning, BOS emphasizes the simultaneous pursuit of differentiation and low cost, leading to a leap in value for both buyers and the company (Kim & Mauborgne, 2005). Moreover, BOS promotes the concept of the strategy canvas as a diagnostic and visual tool to identify factors that influence industry attractiveness and identify where value innovation can be realized.

The Concept of Value Innovation

Central to BOS is the notion of value innovation—delivering exceptional value to customers while simultaneously reducing costs. This dual pursuit breaks the traditional trade-off between differentiation and cost, fostering a leap in value for buyers and the company (Kim & Mauborgne, 2014). Value innovation occurs through eliminating apparent industry standards that no longer add value, reducing features that offer diminishing returns, raising elements customers truly care about, and creating new factors unseen in the industry (Kim & Mauborgne, 2005). This pursuit aims to unlock new demand, make competition irrelevant, and sustain profitability over time (Kim & Mauborgne, 2014).

The Six Paths to Reconstruct Market Boundaries

Kim and Mauborgne outline six pathways to redefine industry boundaries: looking across alternative industries, strategic groups within industries, buyer groups, complementary product and service offerings, the functional-emotional orientation of an industry, and even time. Evaluating these paths allows firms to discover uncharted market space, identify new customer needs, and innovate offerings—thus creating a blue ocean (Kim & Mauborgne, 2005). By systematically analyzing these paths, companies can overcome industry assumptions and harness opportunities for strategic renewal.

Frameworks and Tools for Successful Blue Ocean Strategy

Among various strategic tools developed by Kim and Mauborgne, three are particularly instrumental:

1. Strategy Canvas

This visual tool plots the current strategic profile of an industry, allowing firms to compare factors on which industry rivals compete. Its purpose is to visualize value propositions and identify areas for differentiation and cost reduction. Information needed includes industry factors and competitors’ offerings. Limitations include reliance on accurate, comprehensive data and potential difficulty in identifying breakthrough innovations. The strategy canvas provides a clear visual of where the company can create new value curves to open a blue ocean.

2. Four Actions Framework

The purpose of this framework is to challenge industry assumptions by asking four key questions: What factors should be eliminated? What should be reduced well below industry standards? What should be raised above industry standards? What should be created that the industry has never offered? The information needed involves industry norms, customer pain points, and innovation opportunities. Limitations include the potential oversimplification of complex industry dynamics. Visually, the framework supports the development of new value curves through targeted actions that redefine industry standards.

3. ERRC Grid

The Eliminate-Reduce-Raise-Create (ERRC) Grid operationalizes the Four Actions Framework by enumerating specific strategic actions. Its purpose is to systematically develop a strategic profile that distinguishes the firm from competitors. Data primarily involves current industry offerings and customer preferences. Limitations include potential rigidity in execution and the risk of neglecting external factors. The ERRC Grid visually summarizes strategic trade-offs and opportunities for value innovation, aiding in aligning organizational efforts toward blue ocean creation.

Lessons Learned and Strategic Insights

Research into BOS reveals that value innovation is a powerful catalyst for sustainable competitive advantage by unlocking new demand and reducing direct competition. My understanding has deepened regarding the importance of reconstructing industry boundaries and leveraging innovative tools strategically. The most surprising aspect pertains to how easily industry assumptions can be challenged and overturned through systematic analysis, leading to radically different strategic paths. This insight emphasizes that blue oceans are not only about innovation but also about systematically questioning and redefining industry norms.

Conclusion

Blue Ocean Strategy offers a transformative approach to strategic management that encourages organizations to seek uncontested market space through value innovation. Its core principles, tools, and paths for reconstructing industry boundaries serve as essential guides for companies aiming to break free from bloody red oceans. By adopting the strategic insights presented by Kim and Mauborgne, firms can foster sustainable growth, profitability, and differentiation in an increasingly competitive global marketplace.

References

• Kim, W. C., & Mauborgne, R. (2005). Blue ocean strategy: How to create uncontested market space and make the competition irrelevant. Harvard Business Review Press.
• Kim, W. C., & Mauborgne, R. (2014). Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard Business Review Press.
• Gadiesh, A., & Pires, S. (2018). Strategic management: Concepts and cases. McGraw-Hill Education.
• Amason, A. C. (2011). Strategic Management. Pearson Education.
• Prahalad, C. K., & Ramaswamy, V. (2004). The future of competition: Co-creating unique value with customers. Harvard Business Review Press.
• Porter, M. E. (1980). Competitive Strategy: Techniques for analyzing industries and competitors. Free Press.
• Kim, W. C., & Mauborgne, R. (2009). How Strategy Shapes Structure. Harvard Business Review.
• Kim, W. C., & Mauborgne, R. (2017). Blue Ocean Shift: Beyond Competing. The New York Times.
• Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99–120.
• Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your Business Model. Harvard Business Review.