Porter’s Five Forces Model versus A Blue Ocean Strategy Essay

Porters Five Forces Model, provided by Michael Porter, is an external environmental analysis tool for a specific market. This poser emphasizes that in any existing industry, there are five competition forces threat of immature entrants, power of suppliers, power of customers, threat of substitute products, and intensity of warring rivalry. In addition, these five forces stool influence and determine the positivity of the enterprise. Using the five forces model, one commode analyze the industry attractiveness and the level of competition, which can then help the company to develop the business strategy. In the real world, strategic analysis and strategy formulations are important for company to gain the profitability. For example, IKEA focuses on operating efficiently and developing new product continuously for their business strategies.Also, the Five Forces Model has helped IKEA to maintain its low cost and obtain the huge profitability in the furniture industry over the years. The Blue Ocean Strategy takes the view that innovation, innovation that creates new market space, taps into unsatisfied consumer demand that finds contest market space in the hope of finding a blue ocean. A blue ocean exists where no firms currently operate, leaving the company to lose ones temper without competition.The core strategy is the set innovation, which means that the company should create new demand and make the competition irrelevant. In short, the company needs to pursue uncommon product or service differentiation and low cost simultaneously, in order to capture the untapped market. Moreover, it is significant to create new value that can rebuild the buyer value elements and capture new demand. As the number of firms that come into the market, the market is actually expanded, and they are filling an entrepreneurial role in bringing innovation into the market. In pioneering new markets, it is often the followers that cash in. Eg. Microsoft in relation to the compute r interface, iTunes in relation toportable music.These companies were followers and occupied adaptive innovation in terms of these new markets.Most of the firms are innovating in incremental stages. The type ofinnovation that you have to look at is doesnt have to be the big, radical, revolutionary type of innovation. It is more incremental & adaptive. The aim is grow demand and pull in new and non-customers into the industry. You stop competing and create products and function and offerings that have no alternative from the buyers point of view. In the real world, people usually are not interested in iterate experience. For example, Cirque de Soleil created a brand-new circus performance by reconstructing market boundaries, focusing on the whole situation, and reaching beyond existing demand.Company compendiousA one time accordion player, stilt walker, and fire-eater, Guy Laliberte is the founder of Cirque Du Soleil, one of Canadas largest cultural exports. Created in 1984 by a congregation of 20 street performers, Cirque Du Soleil has achieved a level of revenues that took Ringling Brothers and Barnum & Bailey (the Global Champion of the circus industry) over 100 years to attain. Cirque du Soleil is now a major(ip) Quebec-based organization providing high-quality artistic entertainment. The company has close to 4,000 employees, including 1,300 performing artists from close to 50 different countries. Cirque du Soleil has brought wonder and delight to close to 150 million spectators in more than 300 cities in over forty countries on six continents.Cirque du Soleils Blue Ocean StrategyCirque du Soleils achievement did not come from taking customers from the already shrinking and structurally unattractive circus industry, which historically catered to children. There was also rising sentiment, fueled by wight rights groups, against the use of animals, traditionally an integral part of the circus. Cirque du Soleil did not compete with Ringling Bros. and Ba rnum & Bailey. Instead it created uncontested new market space that made the competition irrelevant.It pulled in a whole new group of customers who were traditionally noncustomers of the industryadults and corporate clients who had turned to theater, opera, or ballet and were, therefore, prepared to pay several times more than the price of a conventional circus ticket for an unprecedented entertainment experience. Significantly, one of the first Cirque productions was titled We Reinvent the Circus. Cirque offered thebest of two circus and theater. By eliminating many of the most expensive elements of the circus, it was able to dramatically reduce its cost structure, achieving both differentiation and low cost. How did Cirque du Soleil create new value? They addressed each of the value creation factorsCirque du Soleil had followed the Blue Ocean Logic Create a quantum leap in buyer value and this will dominate the market. Their Blue Ocean Strategy was a success.