1. Introduction
1.1 Background to the Study and Motivation
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立 政 治 大 學
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1. Introduction
1.1 Background to the Study and Motivation
Blue Ocean strategy (Kim and Mauborgne 2005) allows companies to abandon the field of competition with others, and open up a new and uncontested market space.
The main concepts of Blue Ocean Strategy include value Innovation (aspiring to the differentiation and low cost at the same time), and key analytical tools and frameworks such as the Strategy Canvas, the Four Actions Framework, and the Eliminate-Reduce-Raise-Create Grid.
The four principles of the Blue Ocean Strategy formulation include: 1) how to create uncontested market space by reconstructing market boundaries, 2) focusing on the big picture, reaching beyond existing demand and 4) getting the strategic sequence right. These formulation eprinciples should be taken into consideration, when an organization creates blue oceans by looking across the six conventional boundaries of competition (Six Paths Framework).
The companies manage to create a clear strategy roadmap by following the four steps of visualization. The new demand can be created by unlocking the three tiers of noncustomers.
The most successful companies, like Cirque du Soleil or NTT DoCoMo, watched by the researchers, all didn’t really compete for success,- on the contrary, they just stepped out of the competition in their industries, and tried to satisfy the newly found values of the existing customers or noncustomers. Thus, those companies became the first, and often the strongest brands.
Blue Ocean Strategy was successfully applied both by the largest outfits, like Canon and Bloomberg, and start-ups, like Curves and QB House.
Balanced Scorecard is a tool of strategy implementation. It was first researched by Robert S.
Kaplan and David P. Norton. BSC makes it possible to write the most distinct plan of strategy and convey it to all organizational levels, thus aligning all employees around the strategic goals.
Also, BSC solves the measurement problem of the organization. It helps identify, develop and mobilize the value-creating activities from intangible assets. This is especially important in the knowledge-based environment.
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BSC is equally effective for big and small companies. According to the Bain and Company report 2011, among the 11,000 respondent companies, 65% of the respondents used this tool.
The first motivating factor is curiosity to study how the new techniques and methods behave in different environments. And this is exactly the case as far as Taiwanese businesses and the Blue Ocean Strategy are concerned. Sure enough, the principles of the Blue Ocean are not widespread in Taiwan, and it is possible that we may see some absolutely new implications of it with local specifics.
The second motivating factor is to develop a toolkit, with which the Taiwanese enterprises will be able to become branded companies; to be more particular, the paper aspires to develop the above mentioned toolkit for a dyeing company. The vast majority of Taiwanese enterprises (with rare exceptions, like ASUS and HTC) have always had difficulty going global under their own unique brands. It looks like until now they have been destined to be merely suppliers (notoriously known as OEM4) for their big and famous counterparts in the West and in Japan. So, the Blue Ocean concept might become a critical historical breakthrough for Taiwanese enterprises, and Taiwan itself, allowing Taiwanese businesses to overcome their largest contemporary obstacle- powerful foreign competitors- by not competing with them.
At the same time, according to the Taiwanese Ministry of Finance, there were over 1.14 million SMEs5 in Taiwan at the end of 2003, accounting for 97.83% of all enterprises. The total number of people employed by SMEs was 7.42 million, accounting for 77.56% of all the employed people.6 It means, that the Blue Ocean in Taiwan should first of all be focused on small businesses, which, in turn, might give birth to special techniques of working with the staff and assets of SMEs.
4An original equipment manufacturer, or OEM, manufactures products or components that are purchased by another company and retailed under that purchasing company's brand name.
http://en.wikipedia.org/wiki/Original_equipment_manufacturer
5Small and medium enterprises (SMEs) are companies whose personnel numbers fall below certain limits. In the United States, the Small Business Administration sets small business criteria based on industry,
ownership structure, revenue and number of employees (which in some circumstances may be as high as 1500, although the cap is typically 500). http://en.wikipedia.org/wiki/Small_and_medium_enterprises
6http://www.bizbeginners.biz/taiwan.html
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Thus, the third motivating factor is to develop a Blue Ocean Strategy that could be applied to a small business enterprise.
The fourth motivating factor is to apply the Balanced Scorecard to a small business enterprise in Taiwan. The BSC has become rather widespread among large companies in the West, but it stays almost unfamiliar among the SMEs in Taiwan. But SMEs also need a tool to communicate their strategy to their staffs and to focus everybody on the strategic goals. Kaplan writes (Stringer), that
“without a tool, such as the BSC, more than 90% of employees- even in small enterprises with fewer than 300 employees- are unaware of the strategy”.
Finally, the fifth motivating factor is an attempt to put together the Blue Ocean concept and the BSC, and propose this combination for an SME. Until recently there were no studies that combined research of the simultaneous implementation of BSC and Blue Ocean concept.
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國立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
8