In comparison with the red ones, blue oceans are the markets that do not exist yet and are to be created by companies through innovative and unique products or services. Hence, the red oceans are the ones where competitors fight for a larger market share, while in the blue once, demand is created (Kim & Mauborgne, 2005). A company that has successfully pursued a blue ocean strategy is Uber. Uber has changed the transportation industry by giving people mobility opportunities that did not exist on the market before. Prior to the corporation’s creation, people would either have to call taxi companies and spend extensive time waiting for the driver or catch the cab personally, which is not only inconvenient but also dangerous. Uber created a platform where drivers can provide services, and customers are able to see the automobiles that are in close proximity and choose an option that suits their needs.
Beforehand, the value and cost drivers for companies operating in the same industry would include purchasing of vehicles, wages for the drivers, maintenance, and other factors. Uber’s value, however, depends on the independent drivers who pay a percentage of their earnings by using the app. Hence, the cost drivers for the corporation itself consist of insurances, service expenses, payment processing fees, and other aspects that are not directly linked to the transportation of customers. The product differentiation and the ability to provide relatively low-cost services due to the lack of necessity to invest in automobiles makes Uber a value innovator.
Uber is a value innovator since the company was the first one to upgrade the transportation industry to a more affordable, comfortable, and available version of itself. Currently, every person is able to quickly access the app and find a cab without difficulties due to Uber’s unique way of connecting service providers and customers. Instead of investing in automobiles like the competitors, the corporation allowed drivers to work independently, cutting down on costs and creating a whole new market.
References
Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy. Harvard Business School Press.