Reference no: EM132202490

"Look for a very compelling strategy such as low cost leadership, differentiation, market segment/niche, innovation, etc. that you learned this week, and describe the strategy and why it is successful to that particular business. It could be one of your favorite companies or one you admire.

Please avoid big names like Amazon, Walmart, Apple, Starbucks, etc., and concentrate more on your favorite shop in your neighborhood, a small business you really like, your family business or your favorite restaurant, etc. Be specific and cite your sources in APA format".

Blue Ocean is a business strategy that incorporates differentiation and cost leadership, two strategies which are difficult to manage at the same time. The concept is that the ocean represents the market: if competition is high, the ocean is red with blood. If competition is low, the ocean is blue.  

Nintendo was able to manage this type of strategy for decades with the products that it provided and its cost structure. Most of the products are very different than the competition and the cost of its systems are 30% – 40% lower than the competition. The strategy is successful to the company for many reasons but also seems to be unsuccessful at times.  

The reasons for their failures seem to be in their cost strategy. The components in their systems were inferior to the higher priced competitors Microsoft X Box and Sony PlayStation. According to research, the CPU power, hard disk storage, high definition video and DVD compatibility in the Nintento Wii were inferior in comparison to the Sony Playstation and Microsoft X Box (Hollandsen, 2013).  

The reasons for success seem to be that they are leaders in innovation. The latest product, Nintendo Switch is nothing like the competition. The previous product was just as innovative at the time; the Wii used a motion activated handheld controller which was a new concept at the time. Both products appealed to a higher group of family oriented demographic age groups versus it’s competition.

This leads investors to speculate in whether or not it would be justifiable to increase the costs of the product in order to compete, thereby ditching the blue ocean strategy for just a differentiation or just a cost leadership. Although it has managed to push this strategy since 1977 with its color television games, Nintendo still may be able to compete in a red ocean with just one of these strategies.

References

Hollandsen, S. (2013). The Blue Ocean that disappeared – the case of Nintendo Wii. Journal of Business Strategy, 34(5), 25-35.