The Blue Ocean Way Haaris Hasnain MBA FT 2013 Blue Ocean has been a buzzword off-late in the corporate circles. Companies are looking for frameworks to quickly adapt to the Blue Ocean Strategy. In the aftermath of the recent recession there has been a significant rise in the popularity of this concept. Deceleration in the growth rates of the economies coupled with the reduction in consumer expenditure has put corporate earnings into a tailspin. Moreover the competition for the share of consumers’ wallet is becoming fierce day-by-day. All these have propelled companies to look for new geographies, entering emerging markets and identifying “Blue Oceans” in these economies. Blue Ocean Strategy refers to the creation of uncontested market spaces. According to W. Chan Kim and Mauborgne, authors of the book “Blue Ocean Strategy”, most of the blue oceans that are created emerge from the red oceans by expanding existing industry boundaries. It emphasizes that instead of fighting competition in developed in markets/crowded sectors (Red Oceans) companies should look at creating new domains and categories so that profits are maintained with minimum overheads. Consultants nowadays are looking for solutions built around this strategy. The question is how relevant is this concept in the emerging economies like India and how have companies applied it in the recent times in such markets. India’s success story in the recent times has been hailed by many. Organizations have developed and adapted themselves to suit Indian market needs. Some of the examples where companies have successfully created a market space for themselves in India are: FabIndia John Bissell, who worked in India as a consultant, founded FabIndia in the year 1960 to take Indian handloom textiles to the world. FabIndia was the first company to
foray into such area and thus created a niche for itself. Shaadi.com
Organizations have also been able to determine which factors from their products could be taken away or eliminated.
Anupam Mittal, founder of this e-venture understood the potential significance of a marriage broker in Indian wedding industry. He was quick enough to launch a portal which changed the context of Indian matrimonial industry forever. Air Deccan “Simplyfly” as they used to call it, this airline created a revolution by creating a market space which was unknown to the Indian airline industry since its existence. It made possible for the common man to avail aviation services on account of its no-frills low cost carriers. Shampoo Packaging “Bottom of the Pyramid”, a concept pioneered by C.K.Prahalad was best depicted in this industry. The bottle of shampoo whose cost was more than the wage of an industry worker was replaced by sachets. This brought about a structural change in the market and the demand sky rocketed. Microfinance Institutions One of the finest examples of making the competition irrelevant by giving loans to the less privileged section of the society. Contrary to the popular belief these institutions lend money to the rural poor in developing countries like India, Bangladesh. The rise of Grameen Bank in Bangladesh is a superb case in point. All the above instances, exemplify that the businesses in emerging economies like India have already understood the need for differentiating and creating new target groups for their expansion. Smart use of innovations in their product offerings has been a vital point behind their success.
A big challenge which stands tall in front of all these organizations is to sustain their “Blue Oceans” or in other words to prevent it from becoming “red”. A general tendency in the market is to follow the leader. Thus, shortly after shaadi.com began many matrimony sites mushroomed in India like BharatMatrimony.com and jeevansathi.com. This is a crucial stage for any company where it needs to combat competition and sustain itself. The best way to cope is to be dynamic in nature and regularly innovate. Orkut is seen as one of the major failures which failed to do regular value innovation and succumbed to competition from Facebook. However, Apple has been doing steady innovation and wading out of fierce competition from the likes of Google and Samsung. Thus, Apple and Facebook are rock-solid while Orkut is now lost into oblivion.
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