Blue Ocean Strategies
The concept of Blue Ocean Strategy is regarded as the market for products where there is less competition or no competition. It involves searching for business, products or market where few companies or no company operates and where the pricing pressure does not exist. This strategy can be applied in all sectors not only in one business. In today’s business environment, companies operate under serious competition and most of them are trying to do what it takes to gain market share. However, when a firm’s products come under serious threat from competitors, the market is then saturated at it therefore; it means the company is operating in Red ocean. The Red ocean is the known market space where all competitors exist and compete for the market share. The Blue Ocean is the unknown market space created by a company to upscale its revenue and put a company in a growth path (Kayla, 2018). Therefore, the Blue Ocean strategy is meant to create uncontested market space for a product, make the market competition irrelevant, create and capture a new demand, and finally to break the value cost trade off. These therefore, give an organization an advantage in the market and put a company in a new growth path different from its competitors.
Canon deployed one of the best Blue Ocean strategies to create its own market in the industry during 1990s, when it changed its product focus from traditional photocopier machine to desktop copier. It is important to note that Blue Ocean strategies involved the creation of new market focus where there is little competition and therefore, after exhausting research the company decided to move away from traditional photocopier machine which was being used by managers to desktop copier which could be purchases by any customers. First it changed its customers focus from organizations to everyone interested in photocopier machine. The organization could now purchase desktop copier to employers and even home users could now purchase the copier. It shifted the market focuses and created a different market from already saturated market of industrial photocopier machine.
Blue Ocean Strategies Option
It is essential to note that the Blue Ocean Strategies involve reduce, eliminate, create and raised as well. Within the conferment of an organization management must ask few questions in order to come up with the best Blue Ocean strategies which can build an organization (Kim & Renee, 2017). It must also involve proper analysis of both internal and external factors of an organization to come up with the best strategies which move a company out of the red ocean. However, the best Blue Ocean strategy creates its own market space. It does not compete in the red ocean market it rather tries to move away and build its own market. In order to achieve this, a company must reduce certain aspect in the company. It either reduces the market concentrate where it already been utilize and create a different market altogether. For Canon traditional photocopier machine was being manufactured and sold by several companies and the market was already saturated with several companies trying to outsmart each other in the market to make sale. It had to create a new market and therefore, Canon came up with a new product different from what already in the market. It can therefore, be argued that one of the best Blue Ocean strategies is the invention or creation of new product for the market.
The new product strategy does not only change the market focus for a market, it also revolutionizes a company market strategy and improves the market share of company through the introduction of a new product (Kayla, 2018). The change of product can also means focusing on new customers away from traditional customers and also involving new marketing strategies. For instance, when Canon changed its product from traditional photocopy machine to desktop copier, the company changed the market dynamic and put a lot of focus to everyone computer user. It made it possible for an organization to purchase desktop copier to every employee instead of the manager alone which used to happen with traditional photocopy machine. However, other Blue Ocean strategies can involve changing focus on customers or creating new customers and hence it will create a new market focus. It moves a company from traditional market to unknown market. For example, a company can decide to sale products to customers directly no organization (Kim & Renee, 2017). This was also utilized by Canon when it invented a new desktop copier for any computer users. Introducing a new product in the market helped Canon to mitigate risk and to realize success. Since the product introduce, desktop copier was a new concept which no company had, the company made a robust sales within its first quarter of introduction before other companies started to manufacture similar products.
For an organization to derive its Blue Ocean there must be certain elements which compelled an organization to move to another market. In the cases of Canon, the market was very saturated; companies such as Xerox, Lexmark, Epson and other were manufacturing and selling similar products as Canon (Najdovski, 2015). This created a stiff competition in the market with all companies focusing on selling photocopy machine to organizations where they are used by managers. According to Najdovski (2015), the stiff competition from the company’s rivals created a decline in sales return resulting to reduction in profit. This condition is the red ocean, Canon business environment started to shrink and as a result of competition the market share also started to reduce. The red ocean situation becomes unbearable and this compelled the company to look for an alternative market where it can thrive. Red ocean strategy face a lot of challenges from market competitors and companies usually fight within the market to emerge the winner. But a good a company would strategize and get out of Red Ocean to Blue Ocean. The strategy should involve getting a new product which no other companies in the red ocean has so that the company can leave the saturated market.
Currently, there are several companies manufacturing traditional photocopy machine which are used for by organization. No company has given much attention to desktop copier for home use and small office set up. The management of Canon decided to invest in desktop copier to move away from traditional photocopy machine so that they can put their focus on individual employees’ usage rather than an organization usage (Mauborgne & Chan, 2005). Therefore, the change of Canon market focus from traditional photocopy machine to desktop copier will automatic result to increase in revenue through increase sale return and the company will make moiré profit. It is because by creating new product which means the company will automatically move from Red Ocean to Blue Ocean. There will be little or no competition since most competitors would still be at the red ocean. The only best way to beat other companies is to stop competing with them. In Read Ocean the boundaries are defined, set and accepted by all players and the best option for a company is to bolt out and introduce a different product into the market “Blue Ocean” to create a different market niche.
The new stakeholders in the blue ocean state are the managers of companies willing to take the company to a new level in business. When a new product is launched or when a company move from Red Ocean to blue, the key stakeholders are new customers, employees involved in the production of new products. The change of strategy means the change of the way a company addresses certain critical management issues and therefore, stakeholder perspective and stakeholders themselves must change as well. And therefore, when Canon introduces its new desktop copier to the market, the first thing which changed is the market focus itself.
The stake changed since previously, the Canon used to deal with organizations alone which was the only major user of traditional photocopier machine. The company shifted its market focus to individual people willing to spend on desktop copier for home and officer set. It means the company’s stakeholders also increased hence expanding its market share. In red ocean state Canon was competing with other companies in selling traditional photocopy machine to organization (Kayla, 2018). It made it impossible to improve sales volume and the company prospect was at a limbo and with the move to Blue Ocean Canon built its own market space and stimulated the company growth through increase sales, profit and market dominance in desktop copier.
System Conditions and Issues
Several companies afford similar opportunity to develop a blue ocean. Blue Ocean is created to provide a new market for an organization. Canon is one of the oldest photocopier manufacturers but there are other companies like Xerox, Lexmark and others which manufacture and sell similar products. However, market for traditional photocopy machine was getting thicker since the red ocean was stiffer and many customers would go for alternative products. According to Kayla (2018), the stiff competition from the market reduced the sales return of Canon and this was impacting badly on the company’s general performance. This forced the Canon to make critical strategic decisions which commenced with market research so that a product could be identify. First, the organization analysis the reason for decline in sales return and what can be done to improve the organization performance. The Blue Ocean was then decided to be created to open a new market so that Canon can improve its annual sales return.
It is noted that traditional photocopy machine could only be used by managers because they are expensive and organizations could only purchase one or two for the specific use. This condition made market competition to focus on organizations. The Canon sells traditional photocopy machine and then provide services such as maintenance and repair. The traditional mode of business was not productive and therefore, the management had to decide to inject new dimension in business which could generate more revenue for the company. The market needed portable, durable and easy maintained photocopy which can serve as printer as well and therefore, the desktop copier was invented to provide an alternative revenue stream for Canon. However, to defying the market logical Canon, the Japanese company decided to create small and portable desktop copier for the industry. This shifted target clients of photocopier from corporate purchase to users (Krishnan, 2012). Designing and manufacturing desktop copier industry is the best proposal for Canon to improve its dwindling performance in the market and stimulate growth as well.
Strategic Option Evaluation
However, designing and producing fast, reliable, portable, cost efficient and easy maintenance copier gave Canon more advantage in the market and therefore, it was the beginning of the company improved performance. The strength of the Blue Ocean strategies deployed by Canon is that desktop copier was portable and can be used by employees to create a pool of copier and printers. It has printing; scanning and photocopier options which mean it serve more purposes than the traditional photocopy machine. New product like what Canon did improve the market value of the company and also result to increase sales return when other competitors are still stuck in the red ocean (Krishnan, 2012).
Strategic Recommendation Support
The best strategic option for the company is to invest in a new market where few competitors have not ventured. It is therefore, recommended for Canon to manufacture desktop copier which can connect remotely or virtually, improve the quality of desktop copier by introducing tonner copier with cartridge copier which is popular in the market. Research has proved that tonner copier is economical and can be used for both commercial and personal use and office use (Cusumano, 2012). This will not only shift market attention again, but will also make sure that the company retains its customers. Since the main challenge Canon is facing is the market competition because there are many market entries which are determine to tilt the market to their favor.
High Level Implementation Steps
The strategic option can be implemented in stages to make sure that it properly achieved its intended goal. First, the manager is required to mobilize resources and the entire team behind and have a common goal. However, once a goal has been set, a research is conducted to make sure that Blue Ocean would meet the expectation of the company and it will help the company in achieving its goals. The organization is expected to increase its total annual sales, profit is also expected to jump and the market share of the Canon will increase. It will automatically transform Canon market performance and therefore, shareholders and stakeholders shall be impressed.
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