ExpertsGlobal5
The cornerstone of the blue ocean strategy is the idea that rather than concentrating on beating the competitors, a company must actually prioritize making the competition irrelevant. This can be done by enabling the company to open up a whole new uncontested market space, the proverbial blue ocean. However, despite all the practicality of its tools and the popularity of its proposed frameworks, critical questions confront its credibility.
Firstly, there exist concerns on the research methodology in the paper first proposing the strategy – only successful companies were studied and there was no mention of the number of businesses that applied blue ocean strategy but failed. Secondly, critiques argue that the strategy cannot be a long-term strategy. The strategy is based on the view that competition is irrelevant because the rules of the game are waiting to be set. But practically, sooner or later, some competitor will copy or even improve an already successful model, forcing a company to keep creating new blue oceans. Finding an unknown market space, untainted by competition is not sustainable in the long run. Even if successfully implemented, the strategy will give a company only a limited period of time. Furthermore, the blue ocean strategy as a whole seems not very well-suited to foster the kind of creativity that is needed for developing unique game plans. The frameworks employed in the strategy may even reduce creativity by suggesting that strategy making is a multiple-choice exercise.
The only business strategies that are sustainable in the long run are having low costs, being a high differentiation player, or crafting a niche. Reinventing the wheel is a risk of ignoring current market dynamics.
1. The passage suggests that implementing the blue ocean strategy entails which of the following?
A. Optimizing costs
B. Ignoring short term market opportunities
C. Establishing a clear differentiation factor
D. Focusing on a distinct segment in the market
E. Serving markets with no competition
2. According to the passage, which of the following companies most likely exemplifies a firm that eventually failed despite successfully implementing the blue ocean strategy?
A. A Jamaican shipbuilding company that signed a contract with an Australian port failed to renew the contract.
B. An African fashion firm that entered South American markets to sell traditional African apparel failed to bring designs that the South Americans appreciated.
C. A Tokyo-based real-estate enterprise widely successful in its overseas business went bankrupt because of unforeseen credit risk in foreign markets.
D. A Mexican non-profit selling local hand-made artifacts in Europe could not compete with similar for-profit ventures that flourished after such artifacts became popular.
E. A South Korean electronics giant introduced the first-of-its-kind hand-held electronic device which garnered customer interest at trade shows globally but realized poor sales for lack of customer demand.
3. It can be inferred from the passage that the blue ocean strategy frameworks
A. offer a high number of variations in the strategy
B. likely restrain the extent of innovation
C. make the strategy practically implementable
D. extend reliability to the strategy
E. focus on efforts to defeat competitors
Mind-map
To introduce the blue ocean strategy (Paragraph 1)
To critique the blue ocean strategy (Paragraph 2)
To suggest that reinventing strategies carries risk (Paragraph 3)
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1. The passage suggests that implementing the blue ocean strategy entails which of the following? a. Optimizing costsb. Ignoring short term market opportunitiesc. Establishing a clear differentiation factord. Focusing on a distinct segment in the markete. Serving markets with no competition Question Type: Fact Explanation: The first paragraph mentions that, according to the blue ocean strategy, “rather than concentrating on beating the competitors, a company must actually prioritize on making the competition irrelevant” and that this can be done by “enabling the company to open up a whole new uncontested market space”. Each answer choice needs to be carefully evaluated in light of the information presented in this context. A. The second paragraph mentions that the blue ocean strategy “cannot be a long-term strategy” and the third paragraph mentions that “having low costs” is one of the “only business strategies that are sustainable in the long run”; in other words, optimizing costs is not a part of the blue ocean strategy. Furthermore, our expectation from the correct answer choice is on the lines that the blue ocean strategy entails “making the competition irrelevant” by “enabling the company to open up a whole new uncontested market space”. Incorrect. B. The first paragraph mentions that the blue ocean strategy can be implemented by “enabling the company to open up a whole new uncontested market space”; opening up new markets is likely a short term opportunity; so, it can be inferred that the strategy requires exploiting, rather than ignoring, short term market opportunities; so, it is incorrect to state that the blue ocean strategy entails ignoring short term market opportunities, as the answer choice mentions. Furthermore, our expectation from the correct answer choice is on the lines that the blue ocean strategy entails “making the competition irrelevant” by “enabling the company to open up a whole new uncontested market space”. Incorrect. C. The second paragraph mentions that the blue ocean strategy “cannot be a long-term strategy” and the third paragraph mentions that “being a high differentiation player” is one of the “only business strategies that are sustainable in the long run”; in other words, establishing a clear differentiation factor is not a part of the blue ocean strategy. Furthermore, our expectation from the correct answer choice is on the lines that the blue ocean strategy entails “making the competition irrelevant” by “enabling the company to open up a whole new uncontested market space”. Incorrect. D. The second paragraph mentions that the blue ocean strategy “cannot be a long-term strategy” and the third paragraph mentions that “crafting a niche” is one of the “only business strategies that are sustainable in the long run”; in other words, focusing on a distinct segment in the market is not a part of the blue ocean strategy. Furthermore, our expectation from the correct answer choice is on the lines that the blue ocean strategy entails “making the competition irrelevant” by “enabling the company to open up a whole new uncontested market space”. Incorrect. E. Correct. The first paragraph mentions that, according to the blue ocean strategy, “rather than concentrating on beating the competitors, a company must actually prioritize on making the competition irrelevant” and that this can be done by “enabling the company to open up a whole new uncontested market space”; in other words, the blue ocean strategy entails serving markets with no competition, as the answer choice mentions. E is the best choice.
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2. According to the passage, which of the following companies most likely exemplifies a firm that eventually failed despite successfully implementing the blue ocean strategy?
a. A Jamaican shipbuilding company that signed a contract with an Australian port failed to renew the contract.b. An African fashion firm that entered South American markets to sell traditional African apparel failed to bring designs that the South Americans appreciated.c. A Tokyo-based real-estate enterprise widely successful in its overseas business went bankrupt because of unforeseen credit risk in foreign markets.d. A Mexican non-profit selling local hand-made artifacts in Europe could not compete with similar for-profit ventures that flourished after such artifacts became popular.e. A South Korean electronics giant introduced the first-of-its-kind hand-held electronic device which garnered customer interest at trade shows globally but realized poor sales for lack of customer demand. Question Type: Inference Explanation: The second paragraph mentions that “sooner or later, some competitor will copy or even improve an already successful model, forcing a company to keep creating new blue oceans” and that “Even if successfully implemented, the strategy will give a company only a limited period of time”. A company that undergoes the above developments most likely exemplifies a firm that eventually failed despite successfully implementing the blue ocean strategy. A. Although it can be inferred that the Jamaican shipbuilding company doing business with an Australian port has attempted to explore a new market outside its home country, it cannot be established that the market was “uncontested”. Additionally, it cannot be established that the reason for the failure to renew the contract was a competitor that copied or improved the company’s “already successful model”. Overall, it cannot be established that the company exemplifies a firm that eventually failed despite successfully implementing the blue ocean strategy. Incorrect. B. There is likely little competition in selling traditional African apparel in South America; so, it can be inferred that the African firm doing so has opened up “a whole new uncontested market space” and thus successfully implemented the blue ocean strategy; however, the firm failed due to its inability to “bring designs that the South Americans appreciated” and not due to a competitor that copied or improved the company’s “already successful model”; so, it cannot be established that the firm exemplifies a firm that eventually failed despite successfully implementing the blue ocean strategy. Incorrect. C. Although it can be inferred that the Tokyo-based real-estate enterprise doing business overseas has attempted to explore a new market outside its home country, it cannot be established that the market was “uncontested”. Additionally, the enterprise failed due to a financial risk and not due to a competitor that copied or improved the company’s “already successful model”; so, it cannot be established that the enterprise exemplifies a firm that eventually failed despite successfully implementing the blue ocean strategy. Incorrect. D. Correct. There is likely little competition in selling hand-made Mexican artifacts in Europe; so, it can be inferred that the Mexican non-profit doing so has opened up “a whole new uncontested market space” and thus successfully implemented the blue ocean strategy. Additionally, the non-profit failed because it could not “compete with similar for-profit ventures” that “flourished after such artifacts became popular”; it can be inferred that the for-profit ventures likely copied or improved the “already successful model” of the Mexican non-profit, taking away the non-profit’s “blue ocean”. Overall, it can be established that the non-profit exemplifies a firm that eventually failed despite successfully implementing the blue ocean strategy. E. There is no competition in introducing and selling the first-of-its-kind hand-held electronic device globally; so, it can be inferred that the South Korean electronics opened up “a whole new uncontested market space” and thus successfully implemented the blue ocean strategy; however, the electronics giant failed due to its inability to generate sales and not due to a competitor that copied or improved the company’s “already successful model”; so, it cannot be established that the giant exemplifies a firm that eventually failed despite successfully implementing the blue ocean strategy. Incorrect. D is the best choice.
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3. It can be inferred from the passage that the blue ocean strategy frameworks
a. offer a high number of variations in the strategy
b. likely restrain the extent of innovationc. make the strategy practically implementable
d. extend reliability to the strategy
e. focus on efforts to defeat competitors
Question Type: Inference
Explanation: The first paragraph mentions that the “proposed frameworks” of the blue ocean strategy enjoy “popularity” and the second paragraph mentions that “The frameworks employed in the strategy may even reduce creativity by suggesting that strategy making is a multiple-choice exercise”. Each answer choice needs to be carefully evaluated in light of the information presented in this context.
A. Trap. The second paragraph mentions that the blue ocean strategy is “not very well-suited to foster...creativity” and that its frameworks “may even reduce creativity by suggesting that strategy making is a multiple-choice exercise”; in the context of the discussion, it can be inferred that the blue ocean strategy frameworks
offer only a limited number of options and may reduce creativity; so, it is incorrect to state that the frameworks offer “a high number of” variations in the strategy, as the answer choice mentions. Incorrect.
B.
Correct. The second paragraph mentions that the blue ocean strategy is “not very well-suited to foster...creativity” and that its frameworks “may even reduce creativity by suggesting that strategy making is a multiple-choice exercise”; in the context of the discussion, it can be inferred that the blue ocean strategy frameworks
offer only a limited number of options and may reduce creativity; in other words, the frameworks likely restrain the extent of innovation, as the answer choice mentions.
C. The first paragraph mentions that the “proposed frameworks” of the blue ocean strategy enjoy “popularity” and the second paragraph mentions that “The frameworks employed in the strategy may even reduce creativity by suggesting that strategy making is a multiple-choice exercise”;
none of these references make any connection between practically implementing the strategy and its frameworks; so, it cannot be established that the frameworks “make the strategy practically implementable”, as the answer choice mentions. Incorrect.
D. The first paragraph mentions that “despite all the practicality of its tools and the popularity of its proposed frameworks, critical questions confront” the strategy’s “credibility”; it can be inferred that the
strategy’s credibility is questioned and that the passage makes
no connection between the strategy’s reliability and its frameworks; so, it is incorrect to state that the frameworks extend the reliability to the strategy, as the answer choice mentions. Incorrect.
E. The first paragraph mentions that blue ocean strategy is the idea that
rather than “beating the competitors”, a company must “prioritize making the competition irrelevant”, suggesting that the strategy does not focus on beating competitors; so, it is incorrect to state that the strategy’s frameworks “focus on efforts to defeat competitors”, as the answer choice mentions. Incorrect.
B is the best choice.