Blue Ocean Strategy and Porter’s Five Forces Analysis Report (Assessment)

Introduction

Porter’s Five Forces analysis is the methodology that is applicable for evaluating a business model based on specific criteria determining the success of a particular strategy for selling goods or services. Lüttgens and Diener (2016) describe this technique as an important algorithm for evaluating innovative entrepreneurial activities and note that all the five factors – buyers’ power, suppliers’ power, the threat of entrants, the threat of substitutions, and competition – affect selling performance significantly.

In relation to the proposed product, in particular, a smart first-aid kit signaling the expiring shelf life of drugs, this assessment strategy may allow evaluating potential impacts and risks associated with the promotion of the device in the market. In this case, suppliers’ power is the least strong because the product is innovative and has no analogs, which eliminates the role of third-party distributors in the formation of demand. Consequently, the competition parameter also does not pose a significant threat since the smart first-aid kit is a unique device with exclusive functions. Therefore, these two criteria may be regarded as potentially safe and inconsiderable.

Main body

Regarding buyers’ power and the influence of this criterion, the situation is different. According to Teece and Leih (2016, p. 11), innovations tend to focus on “dynamic environments”, which in the case of a smart first-aid kit complicates the possibilities of intervention. The target audience for this device is either older adults or people with disabilities because the gadget serves as a reminder, although pharmacological companies may also be interested in this product.

These categories of the population, as a rule, are not wealthy enough to generate significant profits. Therefore, despite potential demand, the threat of a shortage of consumers may emerge as an undesirable consequence.

The innovation market is an actively developing industry, which testifies to the threat of the emergence of new entrants. In case the smart first-aid kit proves its success and becomes demanded among the target audience, this will become an additional incentive to create analogs, which, in turn, may lead to the danger of substitute products. As Lüttgens and Diener (2016) note, as an evaluation criterion, the factor of government regulation should be taken into account, in particular, patenting and property rights systems.

In order to avoid the danger of duplication of an innovative product, it is essential to include it in the state register as a unique device, which will protect sales and eliminate the appearance of counterfeit products in the market. This will not affect profits significantly, but at the same time, it will strengthen the interest of the key audience, which is an important background for stable sales. Therefore, the protection of rights and the official registration of an innovative device are those measures that may contribute to avoiding the threats of new entrants and substitutes.

Blue Ocean Strategy

When applying the Blue Ocean strategy to the smart first-aid kit that signals the expiring shelf of drugs, one can note that this methodology is one of the few that stimulate the sales of the device as much as possible. Čirjevskis (2017) argue that business tactics based on this principle are productive in the context of innovative development since competition serving as a driver for many industries is not considered an impact. As a result, manufacturers can find new markets without experiencing pressure from rivals and without delving into oversaturated markets. Typical management practices involving tough marketing practices are unacceptable, and the emphasis on development rather than struggle is the primary one.

Regarding the real steps that manufacturers can take as part of the implementation of the Blue Ocean strategy in relation to the smart first-aid kit, the situation is not insoluble since this product has no analogs and competitors. As Gündüz (2018) states, quite often, a blue ocean becomes one after turning from red when an organization manages to overcome its competitors in a tough fight. Nevertheless, the device in question, as an innovative product and a high-tech gadget, cannot be considered the item that is to withstand consumer demand.

Its creation is the result of a non-standard approach that addresses an urgent medical problem and can improve the quality of healthcare, thereby solving related problems. The emphasis on innovation as a key aspect can have a positive impact because the involvement of various stakeholders, including not only older adults and disabled people but also drug manufacturers can take the pharmaceutical industry to a new level.

Conclusion

As real steps to advance the Blue Ocean strategy, one can implement some relevant measures. Firstly, it is essential to focus on improvement, eliminating competition as a potential work option. Also, one should exclude the mechanism that implies making profits on the basis of production costs. Finally, it is necessary to strive to maintain demand for the product at all costs, even if a price reduction is required for this. These steps can enable the formation of a sustainable Blue Ocean strategy and maintain the interest of the target market in the proposed device.

Reference List

Čirjevskis, 2017, ‘Exploration of qualitative success factors of innovative e-business startups: blue ocean strategy versus dynamic capabilities’, International Journal of Business Excellence, vol. 13, no. 4, pp. 459-478.

Gündüz, Ş 2018, ‘Preventing blue ocean from turning into red ocean: a case study of a room escape game’, Journal of Human Sciences, vol. 15, no. 1, pp. 1-7.

Lüttgens, D & Diener, K 2016, ‘Business model patterns used as a tool for creating (new) innovative business models’, Journal of Business Models, vol. 4, no. 3, pp. 19-36.

Teece, D & Leih, S 2016, ‘Uncertainty, innovation, and dynamic capabilities: an introduction’, California Management Review, vol. 58, no. 4, pp. 5-12.