In Appendix A, the authors examine auto industry. They write:
In the 1970s, the Japanese created a new blue ocean, challenging the
Back in 1970s, majority of American households already owned cars. The Japanese automakers, therefore, were competing in existing market rather than creating a new blue ocean. Sales of Japanese-branded vehicles rose steadily because of these reasons:
- The market was expanding because of population increase.
- The Japanese car makers ate into the market share of the Big Three.
- More and more American families could afford to purchase second or third cars.
The third reason could readily be explained by older marketing models. Success of Toyota, on the other hand, can be explained by the famed Toyota Production System. The Japanese also moved up the value chain by selling luxury cars, e.g. Lexus by Toyota, Acura by Honda and Infiniti by Nissan.
The book continues…
Fast-forward to 1984. A beleaguered Chrysler, on the edge of bankruptcy, unveiled the minivan, creating a new blue ocean in the auto industry.
The success of the minivan ignited the sports utility vehicle (SUV) boom in the 1990s, which expanded the blue ocean Chrysler had unlocked.
Now, according to Kim and Mauborgne, a Blue Ocean Strategy involves BOTH differentiation and low cost. As we know, minivan and SUV are not cheap. The automakers were competing on differentiation but hardly low cost!
It is clear that the automakers mentioned above did not adopt Blue Ocean Strategy as claimed by the authors. They were, nonetheless, successful. My lecturer said, “Blue Ocean Strategy is one of the strategies, but it is not the best strategy.” I probably have to agree with him.
The Toyota Way
Blue Ocean Strategy on Wikipedia