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Blue Ocean strategies in hotel industry
N.C. Ahmat, R. Abas & A.H. Ahmad-Ridzuan
Faculty of Hotel and Tourism Management, Universiti Teknologi MARA, Penang, Malaysia
S.M. Radzi & M.S.M. Zahari
Faculty of Hotel and Tourism Management, Universiti Teknologi MARA, Shah Alam, Malaysia
ABSTRACT: In the face of intense competition, the merit of Blue Ocean strategy towards the crea-
tion of value innovation and the ability to exploit the untapped market for firm's survival is indubitable.
Some outstanding companies have proven that Blue Ocean strategy contributed significantly towards the
organizational growth and success. However, despite its long existence and its worth, the scantiness of
the strategy adoption is eminent. In light of this, it is worth diagnosing the characteristics of Blue Ocean
strategies in the hotel industry to enable the hoteliers to synthesize the relevant factors associated with
the strategy for a long-term sustainability of the industry. It is also imperative to know to what extent the
execution of such strategy will have an impact on hotel financial performances.
Keywords :
Blue Ocean strategy, hotel industry
1 INTRODUCTION
Ocean strategies indicated that as companies try to
outperform their rivals to grab a greater share of
existing demand, stiff competitions in a bloody
red ocean is resulted. This contradicted with the
Blue Ocean Strategy (BOS) where companies need
to think beyond competing to seize new profit and
increase growth opportunities. It is undeniable
that regardless of the approach used, each strategy
involves both opportunities and risks. It is impor-
tant to clarify the aim of the Blue ocean strategy is
not to outperform the rivals in an existing industry
but rather to create a new market space of a Blue
Ocean by doing things that others disregard. Apart
from that, tapping the niche areas, and reengineer-
ing the product and service provisions are the cor-
nerstone in making the competition irrelevant.
Prior to discussing BOS, it is worth to distin-
guish the traits of ROS and BOS as illustrated
by Kim and Mauborgne (2005a) in Table 1. It is
apparent that BOS is rather a silent mover and a
trend setter than becoming a follower. Kim and
Mauborgne (2005b) further established various
tools and framework to formulate and execute the
Blue Ocean Strategy (BOS) interalia include the
Strategy canvas, the Four-Actions Framework and
the Eliminate-Reduce-Raise-Create grid. The strat-
egy canvas is an alignment of key competing fac-
tors and the offering values to the customers. The
vertical axis comprises of the values or the benefits
rendered to the customers within the variables or
the key competing factors as technology and prod-
uct offerings and the competition currently invested
In today's saturated industries, competing head-to-
head has resulted to a bloody 'red ocean' of rivals fight-
ing over a shrinking profit pools (Kim & Mauborgne,
2005a; Koo, Koo & Luk, 2008). Therefore, employ-
ing the right strategy is vital for a firm's long-term
survival particularly for the hotel industry (Awang,
Ishak, Mohd Radzi & Taha, 2008). According to
Yang (2012a), hotel operators should continuously
provide new offerings in an uncontested market-
place through the evolution of a great number of
modifications of room-associated amenities and the
development of hotel products, which consecutively
result in greater customers' satisfaction, acceptance,
and loyalty. This strategy known as the blue ocean
strategy emphasizes on “value innovation” with the
aim of reducing company cost, yet increasing values
to customer hence making competition irrelevant.
With supply exceeding demand in the hotel industry,
competing for a share of contracting market will not
be sufficient enough to sustain high performance. For
that reason, companies need to go beyond competing
through grasping on new profit and improving the
growth opportunities for their business.
2
THE CONCEPT OF BLUE OCEAN
STRATEGIES
Blue Ocean reflects the unknown or the unexploited
market space. Numerous studies conducted on Red
 
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