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In order to succeed in a
capitalistic society, a business must have a
defined edge over its competition.
Companies go to great lengths in order to develop their edge. It
may be the technological advancement of its products or services,
its
cutting-edge marketing programs, or the way it recruits its
employees. These are examples of the common areas that most
companies seek to build, define, and expand their edge over
competition. Another way that businesses seek to develop an edge is
in their actual strategy, and two of the most popular
business strategies in operation today are the 6 Sigma Strategy
and the Blue Ocean Strategy. Both of these business strategies have
gained widespread traction in the business world over the last 10
years. Although they are both effective, they are different, and
depending on a company’s primary operations and
objectives,
one may be a better fit than the other.
Blue Ocean Strategy
The Blue Ocean Strategy was a business strategy book released in
2005 by author W. Chan Kim. The basic idea behind the Blue Ocean
Strategy is that an organization may experience higher growth and
increased profits by
creating new demand in an uncontested market space versus trying
to
compete
in a marketspace that is already overcrowded with competitors. Blue
Ocean seeks to capitalize on the most basic premises of economic
theory which is supply and demand. Is it easier to generate profit
in a market that is full of sellers, or in a market in which your
company is the only seller. The answer, of course, is in a market
where you are the only seller. The challenge in the Blue Ocean
Strategy, though, is creating this new demand. Creating is not
easy. It requires
innovation,
creativity,
and strong
vision. It may be very
difficult to establish traction at first in a new marketspace, but
once the difficult first steps are taken, a company can increase
profits and
growth
at exceptional levels. There are 4 basic principles in the Blue
Ocean Strategy that must be adopted by a company:
1.
The uncontested marketspace must
be created by expanding market boundaries.
2.
Focusing on the Big Picture
3.
Reach beyond the existing demand
4.
Establish and implement the
correct strategic sequence
Although this business
strategy is called the Blue Ocean Strategy, another key element is
understanding what a Red Ocean is. In the book, Kim explains that a
Red Ocean is where competition already exists. The term Red Ocean
is used because that is where companies fight each other in a
plethora of ruthless and even
unethical ways in order to gain an edge over the competition and
capitalize on the market. The term red is used to denote blood in
the water from all the fighting. The Blue Oceans, however, are
where the water is clear. No one has been there, the market is
open, and competition is scarce. Instead of trying to find all of
one’s market in the Red Oceans that are infested with other
companies, a company may do better to
venture out into the Blue Oceans in order to find clean water
and fresh markets.
6 Sigma
The business acumen of
Asian companies has gained widespread respect throughout the world
in the last 20 years. Not only do they oftentimes know how to
profit in a
forex account, but companies such as
Toyota
and Motorola are recognized as world leaders in company management
and business practices. The
6 Sigma business strategy is a business management strategy
originally developed by Motorola in 1981, and throughout the last 20
years, this business strategy has been adopted by countless
companies in the United States. 6 Sigma’s primary objective is to
improve the quality of process outputs by identifying and removing
the causes of defects, or errors, and minimizing variability in
manufacturing and business
processes. 6 Sigma actually creates an infrastructure within an
organization of people who are experts in various 6 Sigma
principles. These people are recognized by colored belts, similar
to that karate.
Different Businesses Will
Find Each Strategy Unique
Due to its very basic premise, 6 Sigma
will generally be much more attractive to businesses that are
heavily involved in manufacturing. While a business that is not in
manufacturing may still find benefit with the 6 Sigma Strategies, it
is without a doubt, most effective in companies that are
manufacturers. The Blue Ocean Strategy, however, is a bit more
applicable to wide array of business types. Companies that may find
Blue Ocean most applicable are
technology companies or companies
that are able to easily
innovate their products.
Innovation
is a key component of this business strategy, and therefore any
companies that are able to
innovate product development in basic and creative ways may find
it easier to adopt the Blue Ocean Strategy. As companies expand
overseas, they should be wary of financial fraud. Many financial
frauds are exposed on websites such as
forexfraud.com,
and these can help companies stay away from potentially damaging
relationships.
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