Blue Ocean strategies in hotel industry - Theory and Practice in Hospitality and Tourism Research - page 44

Table 1. Different traits of Red Ocean and Blue Ocean Air Asia implemented various strategic moves to

ensure the competition with Malaysia Airlines
(MAS) and regional companies are irrelevant.
This includes elimination of over the counter
booking system, free food/beverage on the plane,
seating class booking system. The company also
managed to reduce 'luxury' facilities provided by
Airport Lounge, inflight attendance service, and
seat quality. In addition, raising or increasing the
flight frequency and shifting the focus on several
key destinations, creating online booking system,
and creating point-to-point travel system (Source:
http://EzineArticles.com/1031603) proved that Air
Asia demonstrates a strong value creation to ben-
efits customers whilst reducing the company cost.
Implicitly, the introduction of the low cost carrier
with its strategic moves, the alluring tagline of
“ now everyone can fly ” and the cheaper price con-
note that people from all walks of life are given the
chance to experience what was once considered as
“luxury” at a value for money price. With the suc-
cessful implementation of Blue Ocean Strategy,
Air Asia has diversified their business into Tune
Hotel and Tune Money maintaining the same con-
cept, the Blue Ocean marketplace (INSEAD, 2007;
airasia.com website).
Other examples of successful company that
implemented Blue Ocean Strategy include Apple
and Google. Apple is currently the world's most
outstanding telecommunication brand as compet-
itors find it hard to imitate the products. Despite
rumours over imitation of Apple iPhone applica-
tion by Samsung Galaxy SIII, to date, there is no
other company could outperform Apple in terms
of security, antivirus, application and whatnot.
Even the rumour is true, but with its current per-
formance and credibility, it is not impossible for
Apple to recreate another new Blue Ocean. In
addition, the death of Steve Job somehow helped
the company to boost its profit as customers are
willing to queue up just to get the brand new hand
phone. Past studies on the Blue Ocean Strategy
proved the effectiveness of the Blue Ocean strat-
egy implementation in various multinational
companies including Apple, Canon, IBM, Mc
Donalds and Air Asia (to name a few). In short,
the Blue Ocean will remain the engine of growth
and prospects in most established market spaces
and it is consistent across time regardless of the
industry while Red Ocean are shrinking readily
(Kim & Mauborgne, 2005b). Nonetheless, despite
all the success stories proven by the aforemen-
tioned companies, lack of studies provides the
information pertaining to the impact of the Blue
Ocean Strategy on their financial performances.
With that, it is important to look at the impact
of such strategy towards the financial aspect of
the company.

strategy.

Source: Kim and Mauborgne (2005a).

in which is positioned at the horizontal axis. The
diagnosis enable firm to position it and measures
its relative performance against the rivals across
the industry. What distinguishes BOS with other
management strategies then? As BOS emphasizes
on value innovation, the strategy enables firm to
ploy and galvanize the right actions to maneuver
by shifting the focus from competitors to alterna-
tives and from customers to non-customers.
The Four-action framework is an analytical tool
where the management team systematically estab-
lishes a new value curve through series of insightful
questions by reducing factors below the standard;
eliminating factors that the company disregard,
raising factors well below the standard and creat-
ing the untapped factors. Reconstructing the buyer
value elements according to Yang (2012b), enables
hotel operators to create customer value, innova-
tive product and service offerings for customers,
thus resulting to an uncontested marketplace.
The Eliminate-Reduce-Raise-Create grid on
the other hand, is an extension of the four action
framework, which can be presumed as another ver-
sion of SWOT analysis with the Eliminate factors
replacing the Weaknesses, Reduce substitutes the
Threats, Raise to replace the Strengths and Create
to replace the Opportunities. Apart from manipu-
lating those factors as organization normally does
when performing the SWOT analysis, BOS allows
organization to pursue product and service differ-
entiation at a low cost through the eliminate-reduce
factors to break the value-cost tradeoff.

3 SUCCESSFUL COMPANIES UNDER

BLUE OCEAN STRATEGIES

It is said that Air Asia managed to avoid Red
Ocean by competing with Malaysia Airlines
(MAS) and other regional airlines by examining
the factors that industry take for granted and fac-
tors that are important for customers (Ahmad,
2010; Ahmad & Neal, 2006). With the four-action
framework proposed in the Blue Ocean Strategy,