Innovation In Business-Level Strategy: The Concept Of Blue Ocean Strategy

Discuss the concept of blue ocean strategy, and explain how innovation in business-level strategy can change the competitive game in an industry, giving the innovator a sustained competitive advantage

When the market space becomes tight, a company may need to create its own market space, using value innovation to make its products unique. The strategy is called Blue Ocean Strategy.

Innovation for competitive game are:

◈ Increase: A company can achieve competitive advantage by increasing some elements to the level above the standard produced in the industry.

◈ Elimination: A company should get rid of some factors that have been a major source of competition in the industry for a long time.

◈ Decrease: Another way to gain competitive advantage

Identify the strategies managers can develop to increase profitability in fragmented industries

Managers can develop fragmented industries’ profitability by:

Chaining: This is an establishment of network to link the merchants together to lower the operation cost in the industry. The use of technology to pass information across to the merchants that will make them function as one big company.

Franchise: This is when franchisor grants a third party the license to do business under its trademark and trade name. The franchisor does this for remuneration to increase profits.

Horizontal merger: When competition becomes greater and there is a potential advantage when small companies come together to form one big company, managers go for a business consolidation between these small companies in a fragmented industry to improve their collective market share.

Discuss the special problems that exist in embryonic and growth industries and how companies can develop strategies to effectively compete

Problems in embryonic and growth industries

▷

▷ Refine business model: Increase in competition may require a change in business models to suitable models that can compete effectively.

Understand competitive dynamics in mature industries and discuss the strategies managers can develop to increase profitability even when competition is intense

Strategies managers use are:

Deter Entry

This strategy means preventing competitors from entering the market by:

▷ Ensuring there’s a large products that will meet the needs of its market sectors.

▷ Reducing the selling price than what the amount necessary for maximum profits so as to gain more profit in the long run by deterring competitors from entering the industry.

▷ Investing in the industry to demonstrate superior commitment that shows lasting commitment

Manage Competition is

▷ being the determinant for pricing scheme that will enlarge the industry’s profits

▷ Using differentiation strategy to chase away competitors so as to lessen rivalry

▷ Expanding its market share for its existing products market

▷ Coming up with new and better