WORD BLOG
The XYZ Company is an oilfields company that has developed unique strategies that allow it to achieve superior performance by expanding consistently and challenging organizational boundaries. However, these policies fall under the category of Red Ocean strategy that focuses mainly on existing competition in the industry (Hill, et. al, 2014, p. 5). Therefore, there is the need for the company to embrace the blue ocean strategy to expand the boundaries and the market space. Blue ocean strategy refers to the creation of an undiscovered and new market space for a company. The approach ensures that a new customer network is established, new value created and no competition exists for the company. Kim and Mauborgne published the blue ocean strategy in the blue ocean book in 2005 (Chan & Renee, 2011, p. 45). The application of the blue ocean strategy in XYZ Company will be achieved through organizational changes and integrations that aim at improving the existing red ocean strategy. Such changes will include integrating the blue ocean strategy with renewable energy technology, innovation, and globalization. Through combining technology and the blue ocean strategy, unique products will be created; globalization will be achieved; thereby increasing the boundaries of the oilfields company. Innovation will ensure that the cost and differentiation strategies are maintained to ensure that no competition exists for the new products of the enterprise.
Advantages of applying the blue ocean strategy by XYZ Company
The approach will help the XYZ Company to exploit the opportunities available such as new market opportunities in Canada entirely while minimizing all risks. It will also help the company to achieve differentiation and low cost for its products to eliminate the risks of substitute products. It will contribute to creating a new customer base for the enterprise and helping managers to restructure the existing organizational strategies. The strategy will also provide some tools and frameworks, which the company can follow to create a unique and uncontested market for its products. It will help in attaining increased profits and revenues that will lead to growth (Hill, et. al, 2014, p. 6).
Weakness of the strategy
The validity of the blue ocean is built on the assumption that, no competition will emerge. It is not yet concise whether the competition will be eliminated or reduced fully. Secondly, the strategy has no evidence of success for all companies since its advantages are related to successful companies. The evidence to support the assumptions of the blue ocean strategy that can mislead the firm is missing.
Possible impacts of the strategy
The procedures will ensure that the productivity of the business is improved thereby increasing revenues and profits that will result in growth. The implications are supported by the blue ocean paradox illustrated by Kim and Mauborgne. The statistics show a probability of 62% profits and 38% increase in revenues for the XYZ Company (Chan & Renee, 2011, p. 23). Profits will emerge from the creation of new products and the market for the products that are produced trough innovation, low cost, and differentiation will expand. The strategy will also provide some tools and frameworks, which the company can follow to create a unique and uncontested market for its products. The expansion of the market space boundaries, customer base, and globalization will be achieved through the implementation of the blue ocean strategy.
EXECUTIVE SUMMARY
Additionally, the government regulation and laws have led to trade barriers, heavy fines, and tariffs (Team, 2013, p. 5). Economic factors include increased revenues as a result of increased customer base and lower production costs. However, the political instability has led to economic recessions in the area. The economic opportunities that have emerged include the expected market growth and increased demand for energy in the country. However, shortages of refineries and pipelines problems have led to the rise in the prices of the products. Socially, there is the need for the company to attain a zero carbon production to ensure that environmental sustainability is maintained. A wider market for the company will emerge in countries with a higher expectancy rate.
Technological factors include the advancement of technology that has led to research and development of renewable energy technology aimed at achieving the zero carbon atmosphere. Based on legal factors, the government has established policies and rules that will ensure sustainability and reduced risks such as training on safe drilling and mining. Based on the environmental factors, the primary factor here is environmental sustainability. In addition to the external factors, the company faces barriers to entry such as high installation and development cost of oilfields services. XYZ Company faces stiff competition from the Wood group, Baker Hughes, Aker among other oilfields company across the globe (Team, 2013, p. 6). It faces the challenge of substitute products and increased the bargaining power of both customers and suppliers. However, the challenges faced by the company can be solved through proper resource allocation and the introduction of organizational changes.
The distribution of resources for the XYZ firm include budgeting on the introduction of new technology that involves the use of renewable energy (Beloglazov et. al, 2012, p. 778). The use of renewable energy technology will help in achieving environmental sustainability by reducing the emission of carbon to the atmosphere. A zero carbon production will help the company to avoid all fines, tariffs, and restrictions from the government. Technology will help the company to achieve differentiation and low-cost production thus, eliminating the threat of substitute products. Resources should also be allocated to research and development, and the XYZ Company should establish techniques such as directional drilling and pilot carbon footprint methods. The organizational change that is considered best for the company is the integration of technology. The introduction of renewable energy technology will help to eliminate pollution, fines and trade tariffs imposed by the government. It will also assist in achieving cost leadership and differentiation for the products thereby, adding on to the competitive advantages of the firm.
The change model that is best suited for the company is the Adkar model that equips individuals with the tools and framework necessary to embrace change from a personal perspective (Change Management, 2007, p. 2). Both the external and internal stakeholders should be involved in all phases of change such as planning, brainstorming, transition and the implantation phase. After the implementation is done, an evaluation of success should be made through the assessment of the employee behavior in the organization, benchmarking, and scorecard evaluations. Evaluation is necessary to measure success to identify the areas that need more emphasis than others do. In addition to the red ocean strategies aimed at winning the competition, the blue ocean strategy should be introduced to eliminate competition. The plan will be linked to technology to achieve innovation, globalization and increased market space boundaries for the XYZ Company. The strategy will have possible impacts of expanded boundaries, increased profits, and revenues for the firm.
Bibliography
Hill, C.W., Jones, G.R., and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Chan, K.W. and Renee, M., 2011. Blue ocean strategy.
Change Management. 2007. ADKAR – A Model for Change Management, Available at http://www.change-management.com/tutorial-adkar-overview.htm, (accessed 21/08/16)
Team, F.M.E., 2013. PESTLE Analysis. Strategy Skills. Free Management E-books.
Beloglazov, A., Abawajy, J., and Buyya, R., 2012. Energy-aware resource allocation heuristics for efficient management of data centers for cloud computing. Future generation computer systems, 28(5), pp.755-768.
