Toyota Prius Hybrid – BOS
Blue ocean strategy is about how any company or organisation can break out of the red ocean of bloody competition or existing industries and create uncontested market space that makes the competition irrelevant, (Mauborgne,2011).
Toyota, the Japanese auto maker reputed for its process innovation, as it developed the Lean Manufacturing and Just in Time manufacturing philosophies. Toyota is also reputed for Toyota Way, collective managerial values and business methods the company pioneered over years and the company is reputed for its quality manufacturing and production.
Kim and Mauborgne offered one of the suggestions in how to begin creating blue oceans by: Reduce your costs while also offering customers more value. One of the example they referenced in the book is the Toyota Lexus, which was launched in USA in 1989 with the price at that time lower of the Cadillac and Lincoln models but with features and quality of the high-end BMW and Mercedes.
The car was launched at a price less than 20% of the price of BMW and around 35% of the price of the Mercedes respectively. The car became big hit for the company and it made a mark in the United States market as the company was a Japanese company facing tough competition from US auto giants General Motors and Ford Motors. Toyota created a new space of affordable luxury car market and it dominated this uncontested market and steadily built market share in tough US car market. This reflects on what Kim and Mauborgne described as competition. Kim and Mauborgne argues that, ‘’Competing in overcrowded industries is no way to sustain high performance. The real opportunity is to create blue oceans of uncontested market space.’’
Toyota pursuit of Blue Ocean strategy resulted in the launch of Toyota Prius in 1997 which is a full hybrid electric mid-size hatchback, the first mass produced hybrid car and the car is rated as the cleanest car sold in the United States, which was launched in US in 2001. The company sold close to 4 million units and more than half of the sales come from the US market.
Toyota management had encouraged the development hybrid concept car that works on both gasoline and electricity and the current models also include the full electric car. Toyota Prius series created a new market segment of consumers who are highly environmental conscious and also gave an opportunity to all those consumers who wantto focus on saving the environment as global warming due to carbon fuel emissions had become a major concern worldwide.
50 Lessons, (2011b) Overview: Blue Ocean Strategy: Interview with Renee Mauborgne, [Media], Dublin: SkillSoft
Kaila, R. P., (2014) ‘Blue Ocean Strategy – Toyota Hybrid environmental friendly Car success’, Available at: http://analysiscasestudy.blogspot.co.uk/2014/02/blue-ocean-strategy-toyota-prius-hybrid.html, (accessed:14/04/2015)
Kim, W. C., & R. Mauborgne, (2004) ‘Blue Ocean Strategy’, Harvard Business Review, 82 (10) pp.76-84. Retrieved from https://cb.hbsp.harvard.edu/cb/web/pl/product.seam?c=27620110&i=27620111&cs=84530dce34b8b3c736a5b96d0b934f61