The appearance of the new generation of educational toys, such as Hornby’s Blue Ocean, is a huge step ahead, and the other companies will be affected by such creation in many ways. The main factors, where the discussed industry competes are price, quality, fun, appeal to end-user, appeal to adults, and educational value. Considering the response of other existing firms, which are affected by the exploitation of Hornby’s Blue Ocean, the main competitors should be mentioned. First of all, computer games and online games will be used less, then TV, toys, and homework occupation will be reduced as they deal either with education or with entertainment. The main differential feature of Hornby’s Blue Ocean is that it embraces both education and entertainment, which is the main competitive element for other companies.
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Response of existing firms that will be affected by the exploitation of the new Blue Ocean may be of different nature, but let us consider the most significant one, which must be present in the companies’ strategies. The main activities, which should be provided, are the product life cycle analysis, competitors’ analysis, product analysis, growth vector analysis, gap analysis, and profit pool analysis.1 All these responses should be used by the affected firms in order to remain on the markets and be able to compete with Hornby.
Product life cycle analysis: First, the product life cycle analysis should be completed by the competing companies with the aim to improve the way the product comes through. Four stages should be analyzed, such as introduction, growth, maturity, and decline and improvement in order to increase the effectiveness of the product cycle.2 The changes, which are going to be provided, will help to increase the industry sales.
Competitors’ analysis: Taking Hornby as the main competitor, the other companies still should be analyzed from two perspectives: either competition is provided at the business unit level, or at the corporate level. The chance should not be avoided that the competition is provided on both these levels. The appearance of the absolutely new product on the market stage leads to the ruining of the market boundaries, the market share is not identified anymore, as well as customer-competitor profiles.
Product analysis: Product scope is the combination of all products, which are served by the company on the market. The consideration of the market scope is usually obtained by the four analytical techniques, such as market analysis, growth vector analysis, gap analysis, and profit pool analysis, which are provided with the aim to understand the extend of the product attractiveness and to analyze the activities, which can increase it.
Market analysis: Market analysis is provided with the aim to consider the segment of the market and to identify the company’s product placement in it. The factors of the other product success on the market may be analyzed and the personal strategy developed. All these actions are necessary for achieving the strategic objectives, which were placed before the company as a successful business plan.4
Growth vector analysis: Analyzing the growth vector, as one of the responses applied by the company, four different directions may be considered, such as:
- concentration on the current customer segment,
- market development, the technique, which allows adding a new customer segment by the invention a new product,
- the immediate new product adding as the aim,
- the changes, which are provided in both segments, customer and product. These techniques are implemented in both future and present perspectives.
Gap analysis: The additional paths of growth may be achieved by the competitors through the gap analysis, by comparing the markets of the potential competitors with the aim to consider the competitor’s techniques, applied to the product usage, the consideration of the customers’ segment which is difficult accessed by the product and finding the ways to reach it. The gap analysis also allows identifying the weakest competitor and trying to remove this company from the market at all.6
Profit pool analysis: The last response of the existing competitors, which is introduced in Kluyver and Pearce, is the profit pool analysis, which means the evaluation of the whole profit, which is achieved by the company by means of the evaluation of the company’s value chain.7 The main aim of the analysis is to consider the differences in revenues and profits of the competing companies, analyze them, and provide a personal strategy, which will combine the effective technique, which is the summary of what is done in different companies.
Other responses of the affected companies: There are still some other responses, which may be used by the competing companies, which are affected by Hornby. First, the price may be reduced with the aim to attract customers. The production of a similar product may be the other response, which may be used. This product is going to be of the other brand, so no apparent competition with Hornby would be seen here. The last one, which may be offered is the creation of another Blue Ocean and developing the firm from there.
Kluyver, Cornelis A. De and John A. Pearce. Strategy: a view from the top. Oxford: Pearson/Prentice Hall, 2008.