Impact of Blue Ocean Strategy on Organizational Performance

An organization’s success within the changing global business market significantly depends on the innovative strategy its management adopts. Innovation is vital in establishments since it presents various positive changes to companies. Throughout history, most stakeholders have opposed new ideas and regarded innovative managers as trouble makers (Mebert and Lowe, 2017). Consequently, their corporations have since faced significant competition within their markets and even caused some to stop their operations. Strategic choice is the resolution of picking the best substitute approach that will complement a business’s objective.

However, a great strategy alone will not guarantee success in the commercial marketplace, but its consumers’ satisfaction determines productivity (Mebert and Lowe, 2017). Despite being ignored by several firms, the blue ocean strategy, as explained in this paper, has proved to be the appropriate approach for businesses that intend to remain successful in a highly competitive environment.

Blue Ocean Strategy

The growing competition in the current business environment has compelled some companies to turn their back on the crowded contest. They have selected their path of operation by targeting new marketplaces. Furthermore, they have taken the market share from other organizations by avoiding other firms that have gone deep down into the competition. They have not created a niche in the economies but have instead served the consumers’ unserved needs, thus increasing their market advantage (Shafiq et al., 2017). The strategy employed by such companies is known as the Blue Ocean Approach, which signifies the absence of increased competition. Blue Ocean Strategy focuses on a vital aspect such as value invention and differentiation that influence companies’ success.

Value Innovation

Value can be established by companies having significant technological support. The main aim of companies is to is usually to create value at affordable costs. Considering that the Blue Ocean approach operates at a relatively lower price, it is suitable for businesses to innovate since clients’ cluster is to be taken from the current sector (Shafiq et al., 2017). The strategy’s guidelines have changed from value invention and are significantly innovative in countering the conventional business models, thus giving a head-on to the competitors.

Differentiation

Blue Ocean’s strategy significantly highlights the importance of differentiation. The product or service that a company offers should be distinct so that the demand already existed but was a latent demand (Shafiq et al., 2017). Therefore, it assumes that the consumer should receive it with open arms once a product is delivered. It also denotes that as the demand for a commodity and service increases, it introduces economies of scale, enabling the corporation to boost its profits and share the revenue with clients, thus increasing its market share.

Difference Between Conventional and Blue Ocean Approach

Industry

The industry conditions in conventional thinking are regulated, and companies are expected to follow the provided guidelines. Therefore, the companies are compelled to compete within the current marketplace (Kim and Mauborgne, 2017). Conversely, the industry settings within the Blue Ocean are shaped by the businesses, thus establishing an uncontested market environment.

Market

Company managers that practice conventional thinking exploit their marketplaces and control demand. Such businesses usually influence their market demand, thus controlling their consumer preferences. Likewise, companies that have implemented the blue ocean strategy usually develop and capture new demand in their market (Kim and Mauborgne, 2017). Consequently, the companies tend to attract more consumers who are willing to abandon their current suppliers for such manufacturers.

Organization

Conventional thinking aligns the system of a company’s operations with its strategic selection of differentiation and reduced costs. It, therefore, discourages innovation and growth of the firm since its activities are traditional despite competing in a shifting market. Equally, blue ocean thinking streamlines the whole system of a business’s activities in pursuit of differentiation and low cost (Gobble, 2018). Companies that have implemented the approach are always focused on making their products and services distinct from their rivals.

Offerings

Conventional thinking in organizations focuses on maximizing the offering value within business boundaries. Companies are practicing traditional thinking implement strategies that allow them to build on their worth within their markets. On the contrary, the blue ocean approach offers purchasers the full resolution that surpasses the overall industry (Shafiq et al., 2017). Therefore, companies that have implemented the strategy present the consumers with the freedom to choose from the variety of products offered.

Resources

Conventional thinking in an organization makes the value rate trade-off. Such companies usually establish more worth for their markets but at high costs. Conversely, blue ocean thinking in businesses enables such establishments to break the value cost trade-off (Gobble, 2018). The companies that have implemented the strategy focus on realizing differentiation and, at the same time reduce costs to their customers.

The Essence of Blue Ocean Approach

Companies have their marketplaces and compete globally in such markets with other rivals, which presents their environment as red oceans. For instance, Hello Fresh company’s previous operations were aligned to the red ocean approach and faced rivalry from players such as Pizza, KFC, and Mc Donalds. The companies are distinguished by their employment of similar tools such as pricing plans and advertisements to gain significant market share (Karaoulanis, 2018). However, with the steady entrance of new competitors in the prevailing market, it became difficult for the company to boost its productivity, thus spending more on marketing, enhancing consumer service, promotion, and even reduce costs to attract clients.

The blue ocean approach’s implementation enabled the company to identify industries that other players have not identified. Rather than competing, the company adopted and utilized the strategy to create a demand that further instigated the rise of new markets. For instance, through the growing population of career mothers, demand for healthy dairy substitutes, and ready-cooked meals, the company introduced new menus such as FLEXITARIAN, healthy packed lunch, and ready-cooked meals to satisfy the individual needs (Bradshaw, 2019). Therefore, the blue ocean concept tends to go against all the present business foundations, enabling companies to create new demands while keeping the product prices low.

Principles of Blue Ocean Strategy

Reconstruct Market Boundaries

The principle identifies the direction by which company directors can steadily establish uncontested marketplace across the diverse business sectors, therefore reducing risk. It shows corporations how to render the competition extraneous by assessing the six conservative market rivalry boundaries to open up commercially significant blue oceans (Ortiz-Rey et al., 2021). The six frameworks focus on examining alternative sectors, consumer groups, corresponding goods and services, and time.

Focus on the Future, not Numbers

Illustrates how to design an organization’s approach planning procedure to surpass incremental enhancements to establish value inventions. It offers a substitute to the current tactical planning method, which is usually assumed as a share crunching practice that has corporations stuck into creating incremental progress (Ortiz-Rey et al., 2021). The theory counters planning risks by utilizing a visualizing strategy, thus encourages directors to concentrate on the future rather than focusing on jargon and numbers.

Reach beyond prevailing demand

To establish a significant new requirement environment, directors should challenge the conservative practice of targeting more refined segmentation to satisfy the general consumer preferences completely. The conventional exercise usually results in the attraction of insignificant marketplaces (Bhargava, 2017). However, the principle illustrates how to accumulate demand by creating the principle commonalities between non-clients to maximize the blue ocean approach being developed and unlocking new necessities, thus reducing scale threat.

Understand the Strategic Structure

The standard ensures organizations establish a rise in value to the number of consumers and develop a feasible commerce model to present and sustain economic growth. Certifying that firms build a business framework that benefits from the blue ocean they have adopted tackles corporate model threats (Bhargava, 2017). The principle expresses how directors should make an approach to guarantee that both their organization and consumers win as they establish new business pathways. Therefore, the strategy follows the sequence of adoption, utility, price, and cost.

Overcome Vital Organizational Challenges

The tipping point administration displays managers how to mobilize a company to overwhelm the main organizational barriers that prevent the implementation of the blue ocean strategy. The principles help managers to curb company threats both internally and externally. It outlines how stakeholders and directors can surmount the motivational, cognitive, political, and resource hurdles despite the limited resources and time in adopting it (Alam and Islam, 2017).

Develop Execution into the Approach

By incorporating implementation into strategy development, managers are encouraged to implement and adopt a blue ocean approach deep within its operations. The principle introduces the fair procedure concept since the model signifies an exit from the status quo (Alam and Islam, 2017). A suitable process is necessary to enable both strategy formulation and implementation. Therefore, the blue ocean deals with management threats linked to consumer behaviors and attitudes.

Blue Ocean Approach’s Four Actions Framework

Eliminate

According to the action framework, it is vital to ask the right questions about its goods and services standards. First, managers should understand the factors organizations have been competing for a significant period. Therefore, they should identify the aspects that need substantial investment but do not generate revenues and improve its income. Later, they should eliminate the elements that require significant expenditure and have low returns and focus on relatively high gain.

Reduce

Managers then should identify the factors which need to be reduced below the industry. They should think of a specific good that has been designed to beat the competition, but that takes a significant period and resources to produce. Afterward, they can reduce their capital investment and concentrate on a more straightforward substitute product with low costs but remain relevant, competitive, and attractive to consumers.

Increase

The third achievement idea of the four Action Outline from the Blue Ocean Approach is increasing. Managers should identify the sector’s standards that the current market has not addressed. Afterward, they should raise their investments in establishing functions that will enable them to satisfy the consumer’s needs.

Create

At this stage, a company identifies the aspects that the industry they operate in has never offered the market. Managers should conduct an in-depth assessment of their organization, the sector, the interests and wants of its consumers, and the path the marketplace is directed. This action phase aims to reflect on the future and problems that clients have not communicated.

Steps of Visualizing the Strategy

Visual Awakening

The stage presents that managers should compare their business operations with their competitors by drawing their “as is” approach canvas. The move will enable the Hello Fresh company to understand its environment and its rivals’ operations, thus knowing their weaknesses and strengths (Hansmann, 2018). Consequently, the organization will be able to know where the gaps that it needs to improve in the blue ocean strategy.

Visual Exploration

At this stage, managers are expected to go into the field and assess the six steps of developing a blue ocean strategy. The directors will identify the different advantages of substitute goods and services (Brink and Esselmann, 2020). Therefore, they will establish the factors to eliminate, change and develop to ensure the company remains profitable and gain significant market share.

Visual Approach Fair

In this phase, the company’s administration formulates its “to be” strategy canvas founded on the research from their field assessments. The managers can further get feedback on the complementary approach from its consumers, non-customers, and competitors (Brink and Esselmann, 2020). Thus, they can utilize the data in the establishment of their future strategy.

Visual Communication

Managers are expected to distribute their traditional and current strategic profiles to the stakeholders on a single page for comparison. The shareholders are then likely to analyze the data and present their ideas (Hansmann, 2018). Therefore, the administrators are compelled to select the projects and operational activities that allow their organization to close the loop-holes to implement the blue ocean strategy fully.

Merits and Demerits of Blue Ocean Strategy

Advantages

Blue ocean strategy allows a company to partner with different organizations to identify new markets and evade saturated marketplaces. Implementing the approach further helps overcome the restrictions on competition within prevailing economies and cost structure and enables a business to transform and systematically improve values steadily (Leavy, 2018). Furthermore, value invention is the primary objective of a Blue Ocean Strategy.

It ultimately establishes new demand and worth for customers and hence improves the probability of enhancement (Leavy, 2018). The approach allows necessary transformations in employee mentality, thus enabling them to recognize opportunities. Finally, the model is more central to proven information than unproven ideas, helping companies build their operations from deductions made from the actual data collected.

Disadvantages

An effective Blue Ocean Strategy is instigated by a detailed and calculated study supported by extensive assessment. Companies that have adopted the approach face difficulties in formulating futuristic concepts and recognizing new and colossal marketplaces (Sarkar and Kundu, 2019). Furthermore, after adopting the model, entering an economy in a new market’s primary phase can be risky. By entering new markets, the probability is that consumers may not conform to a commodity or service’s foundation due to the absence of fully built technology. Tapping into new marketplaces may present challenges since companies should be bright and clear about their consumer base (Ngezimana, 2018).

The approach, therefore, requires clarity on the considerations that are formulated and expected risks. Finally, the selection of the Blue Ocean Strategy involves perseverance, preparation, and patience. However, the prevailing marketplaces are still open, and companies tapping into the new markets with an innovative commodity should adopt the model to improve its productivity and establish value.

Canvas Strategy of Hello Fresh

When an organization such as Hello Fresh chooses to implement a Blue Ocean Strategy, it will enable the meal delivery company to identify the untapped markets. Therefore, if all the firms are competing on price, then its managers should focus on quality. The introduction of affordable ready-cooked meals to its menu will enable it to remain profitable since most players such as KFC and Burger King offer fast foods that are viewed as unhealthy by consumers (Atherton, 2018). The Hello Fresh directors should focus on building the new product to establish a premium brand.

Additionally, most commodities inhibit the spread of characteristics beyond cost and quality. The approach canvas is a method of visualizing the features of a good that consumers are currently selecting in the marketplace and how competitors attract clients. For instance, some of Hello Fresh’s consumers face challenges in determining the healthy lunch packs for their kids (Neal et al., 2017). Therefore, introducing the healthy lunch packs in its menu will enable the company to attract clients since the existing market demands lunch packs for both kids whose parents work full time. The move will allow the company to boost its future business since there is significant competition in its current product market.

Additionally, through outlining all the characteristics of a new commodity and those used by other players to compete for consumers, the company will distinguish the features absent in the existing markets, thus detecting untapped marketplaces where it can create demand. For instance, through assessment of the products offered by Hello Fresh’s competitors such as Mc Donalds, the company managers have distinguished that fast foods control the rival players’ menu. Consequently, the organization has stakeholders who have decided to introduce the FLEITARIAN menu, which is made using grains and vegetables. The menu has steadily gained popularity in economies where clients consciousness of animal laws and identified that grains, vegetables, and fruits are supplements to dairy goods and more nutritious (Clossen and Klimczyk, 2018).

Therefore, the firm has invested in the new market, thus creating a significant market share over its rivals in the fast-food market. Furthermore, in a nutshell, the strategy canvas enables the corporations to stay unique by selecting a distinct set of features of the product upon which to contend.

Recommendation for Future Development

Despite the various advantages the blue oceans strategy can present to a company, the firm is expected to face a particular competition level in the future. For Hello Fresh company, there exist various rivals such as Peach dish, Home Chef and Gusto. Therefore, to remain competitive and profitable, the company should stay ahead of the other players by innovating its prevailing menus to attract new markets while sustaining the existing consumers (Vardi et al., 2020). The organization is presently facing these competitors due to the low entry levels within the food industry. However, the firm can reduce the threat that it may encounter through the following recommendations.

READY COOKED MEALS Menu

The menu will be an excellent addition to Hello Fresh company since there are many career consumers with limited time for cooking. Since ready meals are already gaining a market share in the global marketplace, the company can opt to introduce a cooked menu or prepare the meals according to the client’s preference (Guardiola Ramírez, 2019). It can further diversify its operations by making home deliveries of the menu to elderly customers.

FLEXITARIAN Menu

The menu is prepared using whole grains, vegetables, and fruits as a complement to dairy products. It is currently gaining popularity in economies where consumers have consciousness of animal laws and are aware of the benefits of fruits, grains, and vegetables. According to researchers, these foods are likely to help in losing weight and changing consumer lifestyles (Colby, Li and Chapman, 2020). Since consumer preferences are rapidly evolving to healthy foods, the menu will enable the company to attract a significant market share, thus staying ahead of its competitors.

HEALTHY LUNCH PACKS FOR CHILDREN Menu

The product will be a significant addition to Hello Fresh company’s menu and will create demand since mothers presently struggle to identify healthy lunch packs that children enjoy. Presenting the commodity to the market will satisfy the needs of parents who also work full-time with limited time to plan their kids (Stolberg, 2019). Consequently, the company will enhance its future business since there is substantial competition in such a market.

Conclusion

Despite a company focusing on mastering its prevailing markets using conventional strategic planning tools, it is vital to maneuver successfully in the red ocean by competing with its rivals. The red oceans play a significant part in the global business industry. However, the strategy’s adoption will compel a company to concentrate on the vital constraining aspects of competition, thus denying it the commerce world’s strength. Organizations that intend to sustain significant performance should develop their blue ocean approach to make competition irrelevant. The companies can translate the introduced plans into actual commodities to reach two and three tiers on non-clients through the six path process. Therefore, the Hello Fresh company should implement the blue ocean strategy to evade the accepted boundaries that describe the competition and innovative planning.

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