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President Endo speaks on NEC’s business strategy and the vision of the future. [ 05:57 ]
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BlogBarefoot.com Carrie Wilkerson, the Barefoot Executive offers practical insight on keeping your business moving forward everyday. Great encouragement for every entrepreneur.
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Blue Ocean Strategy . . . The future trend of Business strategy ?  

Article by Zigfred Diaz

I was in Star Bucks Club Ultima this afternoon to talk with a friend regarding a new business that he is planning to start.

One of the things that he mentioned was this unique business strategy that’s quite different from what we traditionally learn in business school. According to him, this strategy sorts of deviates from normal business concepts that we hear and read from the usual management gurus. This strategy is called “Blue Ocean Strategy”

I was intrigued by the idea so I did a little bit of research on the subject. 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 claim that the Blue Ocean Strategy is a result of several years of study of strategic moves by over 30 industries in a span of 100 years.

In the book, “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 since it is not yet too crowded. In contrast, “Red Ocean” refers to a market where competition is very high. The market is considered as very crowded already since almost everybody is producing the same type of service and the same kind of goods.

The Blue Ocean strategy is simply to innovate something; something that makes people gives 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.

In order that this can be understood well a “local” application must be cited. According to my friend a classic example of how the Blue Ocean Strategy was used here in the Philippines is the strategic moves of the Gokongwei group. As we all know, the Gokongwei group owns Mobile phone company, Sun Cellular and airline Cebu Pacific among other companies.

Since the market for mobile phones has already been saturated by both Smart and Globe, what Sun Cellular did is to create a “new market” by adding value to products already found in existing markets. As a result of this “added” value, (By making sun to sun calls free) a new untapped market was opened. It could be said that Sun Cellular is not competing directly with Globe and Smart but rather they have raised awareness among the people to buy into this “new market.” As a result, most people now have two cellular phones or two sim cards in a dual sim phone. In this way Sun Cellular is not “out-performing” Smart and Globe but rather they have created a new market, making competition irrelevant.

In the airline industry, Cebu Pacific has managed to apply the Blue Ocean Strategy by adding “value” to what people really want, which is to “fly.” People don’t care about a newspaper, a hot meal or a fancily dressed flight stewardess. What people care about is that they can “fly.” In order to do this airline fares must go down since this is what people care about. This in a sense allowed Cebu Pacific to tap into the “untapped” market. The existing market is referred to as “customers who can only afford to fly.” The untapped market is “every can fly.” This is embodied in Cebu Pacfic’s advertisement “Now every JUAN can fly” (A play on the words “every juan” = “everyone”, with “J” being pronounced as “H”, Juan is the “universal” first name of Filipinos just like John is for the Americans)Cebu Pacific has managed to slash down fares by reducing cost on service features that most people do not really care about such as hot meals etc.

Being involved with the International Marketing Group (IMG), I can now clearly see that they have employed the Blue Ocean Strategy in the way they do business. I do not know if they have being doing this consciously or unconsciously. Instead of selling insurance products directly, IMG teaches it’s clients and brokers the concepts of financial planning and management. (albeit not in a very organized manner) Product is not given primary importance. The financial broker shows his client his need for financial planning. The financial broker who is well versed in financial planning concepts then introduces products that suits the client needs. The untapped market of financial planning needs by the people is claimed by IMG and the added cost for this value service is compensated by reducing cost with regards to training agents and marketing efforts since IMG works on a model that allows insurance and financial services company to “outsource” their marketing and training. Other insurance companies have already followed this path. The trend now is that insurance agents are now becoming financial planners.

My friend’s proposed business has a similar concept but it is something more than financial planning. He wants to introduce a value added service to clients that will enable him to add value to existing service in order to capture “untapped markets” However I could not discuss the details of the plan yet, but I am sure that employing the Blue Ocean Strategy would enable him to succeed in the new business that he is thinking. Perhaps in the proper time I could help him promote his business by writing an article on it, probably when the final details of the plan have been ironed out. However you might want to check out his website at http://www.premierebusinessinc.com

In Traditional Business strategy we talk about “crushing the competition” whereas in Blue Ocean Strategy we talk about “Creating new markets with little or no competition.” Instead of “Strategic Planning” Blue Ocean Strategist resort to “Strategic thinking.” Instead of “cutting prices” to capture a market, Blue Ocean Strategy is to add “value” to products and services to claim an untapped market.

I could personally say the Blue Ocean Strategy is a unique strategy. 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. For me, the critics may just be jealous that they were not the first ones to embody the “strategy” in compact form. The critic’s contention are not valid at all since our way of discovering something or learning something is to build 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.

About the Author

Zigfred Diaz is Vice president for operations for a group of family owned corporations. He is also a Financial & Real estate broker, lawyer, law professor & writer. He regularly blogs on diverse topics including business and entrepreneurship. Visit his blog today.

planning for the future – your business strategy

The importance of a business strategy.

Many entrepreneurs in the daily operations of their companies caught that they lack time, given their strategy for future spending. Yet a little time aside now your company considerable advantage. While youâ? Re busy with the everyday needs of your company or small crises, the things that are going on in your blind spot! Technology develops, your clientsâ? Expectations are slow growing and create new trends in your industry.

More importantly, some of your competitors are doing their business strategies for the future development, hoping to take the lead. If you? Donâ? T is the time for a little business analysis and planning now, you helplessly watch as you see one step ahead of your competitors in the future.If you take the lead or at least to continue, set the time needed for a thorough business analysis. Developing a business strategy and technology strategy that will help your business grow profitably and to develop trends, technologies and changing customer expectations.

Analyze your business.

If you are a business analysis and development of your business strategy for the future, there are several things to check. Matters of great importance are your clientsâ? Expectations and desires, your human and technological resources, and your marketing strategies. Consider the industry you are in, and how it can be changing. Please clientsâ? Expectations? Are you making full use of the Internet and offers everything? Are there any new developments occur, you may need to change your range or the services you offer update?  If there are, those changes before your competitors can give you a big advantage and increase your profits!

Consider how your company is currently active. Is the technology you use to get your business up to date? Will your needs in the future? New technologies are available that would allow you to optimize your business processes and save time or work? Is your current staffing levels are appropriate and sufficient, are your employees trained in the technique you know?

technology and the related changes are inevitable. Progress has been rapidly growing and over-worked for many entrepreneurs, ITA? S is all too easy to fall behind and lose contact with change. It pays for modern companies have a technology strategy to ensure that they remain competitive.

developed a technology strategy.

depending on the content of your technology strategy on the nature of your business – and if you sell or simply use the current technology in your operation. If you sell it, developed a large part of your technology strategy to ensure that you are always up to date on available products, new trends and technological advances are likely to introduce new products, trends or changes in purchasing behavior. It can also subscribe to magazines, newsletters and catalogs, exhibitions, visits, or even industrial investment in developing new products.

If your business is service oriented, the role of technology in your business is probably in the daily operation of your business. This is no less important, however, as the technology that you can use a large influence on the quality of your service and how quickly you can supply it. If the quality and speed is usually the determining factors for the consumer to ensure that your processes are up to date you the edge in a competitive environment.

Think about some of the companies not under the impression you have left in recent years and why did it to one? ITA? s very likely that if you walked out the door to keep it behind the times! The development and implementation of a technology strategy as part of the overall strategy of the company, its customers donâ? T let your entrepreneurial thinking the same.

More Articles Business Strategy

The Importance of a Business Strategy.

Many business operators become so caught up in the day to day running of their business that they devote little time to considering their business strategy for the future. Yet putting a little time aside now can benefit your business significantly. While youâ??re pre-occupied with the daily demands or minor crises of your business, things are happening in your blind spot! Technology is advancing, your clientsâ?? expectations are slowly increasing and new trends are emerging in your industry.

More importantly, some of your competitors are busy developing their business strategies for the future, hoping to take the lead. If you donâ??t make time to do a little business analysis and planning now, you may be watching helplessly as you see your competitors stride ahead of you in the future.If you want to take the lead or at least keep up, make the time to conduct a thorough business analysis. Develop a business strategy and a technology strategy that will help your business grow and develop profitably as trends, technology and client expectations change.

Analyse Your Business.

When doing a business analysis and developing your business strategy for the future, there are several things you should examine. Matters of major importance are your clientsâ?? expectations and desires, your human and technological resources and your marketing strategies. Consider the industry you operate in and how it may be changing.  Are you meeting your clientsâ?? expectations? Are you taking full advantage of the Internet and all it offers? Are there new trends emerging that may require you to change your product range or upgrade the services that you offer?  If there are, making those changes before your competitors do can give you a major advantage and increase your profits!

Take into consideration the way you are currently operating your business. Is the technology you are using to run your business up to date? Will it meet your needs in the future? Is there new technology available that would allow you to streamline your business processes and save on time or labour? Is your current staffing level adequate and are your employees adequately trained in the technology you already have?

Technology and the changes it brings are inescapable. It advances at an ever increasing pace and for many over-worked business operators, itâ??s only too easy to slip behind and lose touch with change. It pays for modern businesses to have a technology strategy in place to ensure they remain competitive.

Developing a Technology Strategy.

The content of your technology strategy will depend on the nature of your business – and whether you sell technology or simply use it in the running of your operation. If you sell it, a large part of your technology strategy will be designed to ensure you keep up-to-date on available products, emerging trends, and advances in technology that are likely to lead to new products, trends or altered buying patterns. It may include subscribing to journals, newsletters and catalogues, attending industry expos or even investing in the development of new products.

If your business is service orientated, the major role of technology in your business is likely to be in the day to day operation of your business. That is no less important however, as the technology you utilise can have a major impact on the quality of your service and the speed at which you can deliver it. As quality and speed are generally the defining factors for consumers, ensuring your processes are up to date can give you the edge in a competitive field.

Think about some of the businesses that have left you unimpressed in recent years and why that occurred â?? itâ??s quite likely that as you walked out the door you considered them to be behind the times! Developing and implementing a technology strategy as part of your overall business strategy will ensure clients donâ??t leave your business thinking the same thing.