Yellow Tail’s Blue Ocean Strategy
The business spheres with saturated entrepreneurs inspired a new blue ocean strategy implanted by firms such as Yellow Tail. Companies that have a group of loyal customers and a considerable capital limit not only the entrants into an industry but also themselves in the domain of innovations. As Parnell (2014) emphasizes, “competitive responses should be expected when a substantial strategic change is employed” (p. 266). Thus, the concept of creating a business environment without rivals is reasonable. Yellow Tails illustrates this idea present in the coursebook since the effective blue ocean strategy defines its distinctiveness. The firm innovative approach lies in eliminating conservative methods of wine-producing and formulating demand for the audience not accessible by other industry representatives.
First of all, a blue ocean strategy presents a valuable competitive advantage for newly established firms such as Yellow Tail. The strategy’s primary significance is the innovative approach to the existing industrial production. It is not the novel nature of goods that defines its efficiency but rather a new subindustry and subsequent demand. Additionally, the customers need to be reassured that the new services are aimed at responding to their previously unfulfilled wants (Leavy, 2018). For Yellow Tail, the recently emerged firm selected a different audience than its French and Italian competitors: non-experts in drinking wine. This decision created a perspective of penetration into the USA market, where wine is not as popular as in Europe. As a result, the manufacturers gained considerable revenue from their campaign (Pravin, 2021). Thus, in the world of many competitors, the exclusion policy proves to be highly beneficial.
The most critical step in implementing the strategy is removing the unnecessary elements ingrained in an industry’s production. A sphere may possess a range of standard requirements for its products that are still valued by some customers but do not consider the new needs of other people (Alam & Islam, 2017). For example, the makers of wine developed a system of evaluating the product quality by the reputation of the vineyards and the age of the drinks manufactured. As a result, the process of wine brewing is a costly one due to technological difficulties. Yellow Tail resolved to produce low-priced beverages that do not need aging and conservation equipment (Pravin, 2021). Therefore, the company reduced expenses of production that were no more relevant for the particular market and adapted to the industry’s demands for profitable strategy implementation.
The next component of the blue ocean strategy is creating a new value that would serve as a firm’s competitive advantage. Namely, an enterprise should offer services that competitors do not include in their practice and could not because it would contradict their strategy (Alam & Islam, 2017). In the case of Yellow Tail, such innovative solutions are the advertising program and recipes of the drinks. The labels on the bottles contain information about the wines written in simple language, not cliche phrases of traditional firms. Furthermore, the beverages are produced for people that have not yet accustomed to the distinctive taste of European wines. In brief, the business managed to take advantage of the incompetent audience by creating new kinds of products.
To summarize, Yellow Tail chose the newly emerged strategy in the globalized and highly competitive market. The wine industry is full of well-established companies that gained the reverence of their customers by adhering to the traditions of producing the beverages. Yellow Tail, on the contrary, offers products that are different in their quality and promotion policy. In this way, the company has gained the foreign market that brings it great profit with low manufacturing costs.
Alam, S., & Islam, M. T. (2017). Impact of blue ocean strategy on organizational performance: A literature review toward implementation logic. IOSR Journal of Business and Management, 19(01), 01–19. Web.
Leavy, B. (2018). Value innovation and how to successfully incubate “Blue ocean” initiatives. Strategy & Leadership, 46(3), 10–20. Web.
Parnell, J. A. (2014). Strategic management: Theory and practice. SAGE Publications.
Pravin, P. (2021). The blue ocean strategy behind Yellow Tail. TheStrategyStory. Web.