Nowadays, companies are required to be constantly willing to change in order to achieve efficient business success. This is due to the fact that markets today are characterized by extensive saturation and overcrowding of competing companies. Finally, the large quantity of products and services on offer is hardly differentiable for consumers. The challenges listed above confirm that systematic and efficient innovation management is necessary to secure the existence and future orientation of companies.
Within the tourism industry, in particular, there is enormous pressure to innovate due to global competition and the growing expectations of guests. However, tourism businesses are not known for being innovative, they tend to copy showcase examples. This is because there is often a lack of money for research and development, as well as time, as it is already a major challenge to perform the day-to-day tasks.
According to a study by PwC, innovative companies should grow faster, generate more revenue and thus represent a key success factor for companies. Therefore, the question of how to embed systematic innovation management in a company is increasingly coming to the fore. One option used when embedding innovation management in companies is the Blue Ocean Strategy.
What exactly is meant by the Blue Ocean strategy and how it works will be explained and demonstrated in more detail in this paper. Furthermore, the focus of this scientific essay is to answer the question of to what extent the application of the Blue Ocean strategy within the tourism industry can contribute to its success. This will be analyzed and explained using the example of the “CitizenM” - Hotel chain. In particular, reference will be made to its focus, divergence, and compelling tagline.
Table of Contents
1.Introduction
2. The Blue Ocean Strategy
3. Application of the Blue Ocean strategy within the tourism industry
3.1 Illustration and analysis of the focus through the strategy canvas
3.2 The Eliminate-Reduce-Raise-Create Grid (ERRC) for the development of divergence in comparison with competitors
3.3 Formulation of a compelling tagline
4. Conclusion
Objectives & Core Themes
This essay examines how the application of the Blue Ocean Strategy (BOS) can foster innovation and business success within the competitive tourism industry, using the CitizenM hotel chain as a primary case study.
- Theoretical foundations of Blue Ocean Strategy
- Market differentiation through the Strategy Canvas
- Application of the Eliminate-Reduce-Raise-Create (ERRC) framework
- Development of unique value propositions in the hotel sector
- Strategic alignment and the importance of a compelling tagline
Excerpt from the Book
3.1 Illustration and analysis of the focus through the strategy canvas
To make the competition irrelevant, hotels need to get an overview of what the competition is offering to avoid doing just that. The strategy canvas can be used to illustrate the current state of the market in the respective industry, providing a framework for action as well as diagnosis. It can illustrate the factors in which there is rivalry in the industry, what is offered to customers by the competition, and what the competition is currently investing in.
The figure represents factors within which hotels compete as well as invest. Here, specifically, it is about the comparison between luxury (five-star) hotels and three-star hotels. The figure shows on which factors much importance is attached, and on which rather less. One can then draw the main difference between the focus of five-star hotels and three-star hotels. This comparison in particular was chosen because the guiding principle of the CitizenM hotel chain was to offer a five-star hotel service at the price of a three-star hotel. The CitizenM Hotel team found that most travelers visited either three-star hotels or luxury hotels. They also wanted to find out why mobile citizens would choose luxury hotels over three-star hotels and the other way around.
Summary of Chapters
1.Introduction: Outlines the necessity of innovation in the tourism industry due to market saturation and introduces the Blue Ocean Strategy as a solution.
2. The Blue Ocean Strategy: Defines the core concepts of Blue Ocean Strategy, distinguishing it from Red Ocean market competition by focusing on value innovation and new market space.
3. Application of the Blue Ocean strategy within the tourism industry: Discusses the practical implementation of BOS in the hotel sector to escape standard industry competition.
3.1 Illustration and analysis of the focus through the strategy canvas: Explains how the strategy canvas serves as a diagnostic tool to compare market offerings and identify competitive gaps.
3.2 The Eliminate-Reduce-Raise-Create Grid (ERRC) for the development of divergence in comparison with competitors: Details the use of the ERRC grid to structurally innovate service offerings by eliminating or reducing conventional hotel features.
3.3 Formulation of a compelling tagline: Analyzes the importance of clear strategic messaging, highlighting the CitizenM tagline as an effective example of communicating affordable luxury.
4. Conclusion: Summarizes the success of CitizenM as a showcase for BOS and emphasizes the need for companies to move beyond traditional organizational patterns.
Keywords
Blue Ocean Strategy, BOS, Tourism Industry, Hotel Management, Innovation, Strategy Canvas, ERRC Grid, Value Innovation, CitizenM, Market Space, Competitive Advantage, Affordable Luxury, Strategic Management, Business Model, Differentiation
Frequently Asked Questions
What is the core focus of this scientific essay?
The essay explores how the Blue Ocean Strategy can be applied within the tourism industry to help companies innovate, differentiate themselves, and achieve success by creating new market space.
What are the primary thematic areas covered?
The main themes include strategic management, the differentiation between "Red Oceans" and "Blue Oceans," the use of the strategy canvas, and the practical application of the Four Actions Framework and ERRC grid.
What is the primary goal of the author?
The goal is to demonstrate that hotels can escape intense price competition by redefining service offerings and shifting their strategic focus, as exemplified by the CitizenM hotel chain.
Which specific methodology is utilized?
The author uses a qualitative approach, applying established strategic management frameworks (Strategy Canvas, ERRC, Four Actions Framework) to analyze the business model of CitizenM.
What does the main body of the text address?
The main body breaks down the theory of Blue Ocean Strategy and applies it step-by-step to the hotel industry, specifically analyzing CitizenM's transition from traditional service models to affordable luxury.
Which keywords best describe the work?
The work is characterized by terms like Blue Ocean Strategy, value innovation, market differentiation, strategic canvas, and the hotel sector.
Why was the CitizenM hotel chain chosen for this analysis?
CitizenM serves as an ideal case study because they successfully implemented BOS to offer five-star services at three-star prices, effectively disrupting the traditional hotel industry model.
What is the significance of the "compelling tagline" mentioned?
The tagline is essential for communicating the firm's unique value proposition. In the case of CitizenM, the tagline "affordable luxury" clearly translates their strategic innovation to the customer.
How does the ERRC grid contribute to the strategy?
The ERRC grid (Eliminate-Reduce-Raise-Create) helps companies identify which traditional industry standards can be removed or reduced, and which new value-adding factors should be introduced to create divergence.
- Quote paper
- Anastazia Spajic (Author), 2021, The Blue Ocean Strategy in the Tourist Industry, Munich, GRIN Verlag, https://www.grin.com/document/1119114
