Blue Ocean Strategy Explained: How Asian MNCs Use It (and Common Student Mistakes to Avoid in Assignments)

In business strategy, many companies compete in crowded markets, fighting for market share in what is known as a Red Ocean. But some businesses break free from competition by creating entirely new markets, making the competition irrelevant. This is the essence of Blue Ocean Strategy—a concept that has helped many companies achieve long-term success.

As a university student, understanding Blue Ocean Strategy is crucial for assignments, case studies, and business reports. However, many students misapply or misunderstand this framework, leading to weak analysis.

This article will help you:

• Understand what Blue Ocean Strategy is and how it differs from traditional competitive strategies.
• Learn how four major Asian multinational corporations (MNCs) successfully applied the Blue Ocean Strategy.
• Identify common mistakes students make when using Blue Ocean Strategy in assignments—and how to avoid them.

What is Blue Ocean Strategy?

Blue Ocean Strategy is about creating uncontested market space rather than competing in existing industries. Instead of fighting for market share in an overcrowded Red Ocean, companies that apply this strategy innovate in ways that redefine industry boundaries, making the competition irrelevant.

This is different from differentiation strategies, where companies still compete in the same industry but focus on making their product unique. A true Blue Ocean is when a company shifts customer expectations, eliminates industry constraints, and attracts new market segments that competitors have ignored.

Now, let’s look at four Asian MNCs that successfully created Blue Oceans in their industries.

How 4 Asian MNCs Applied Blue Ocean Strategy

Grab: From Ride-Hailing to the Super App Ecosystem

Grab started as a ride-hailing service, competing directly with taxi companies and ride-sharing rivals like Uber. However, instead of staying in this highly competitive Red Ocean, Grab expanded beyond transportation and created a super app that combines ride-hailing, food delivery, digital banking, and financial services.

How Grab applied Blue Ocean Strategy:

• Eliminated the limitations of traditional transport services by offering digital payments, making transactions cashless and more efficient.
• Created new demand by integrating food delivery (GrabFood) and financial services (GrabPay), expanding its customer base beyond commuters.
• Reshaped the industry by combining mobility, convenience, and finance into a single platform, reducing dependency on any one service.

Xiaomi: Community-Driven Disruption in the Smartphone Market

Xiaomi entered the highly competitive smartphone industry, where giants like Apple and Samsung dominated. Instead of competing in the same way, Xiaomi created a Blue Ocean by leveraging an online-only sales model and building a community-driven brand.

How Xiaomi applied Blue Ocean Strategy:

• Eliminated the need for physical stores, cutting costs and allowing it to sell high-quality smartphones at lower prices.
• Created demand by engaging users in product development, making its customers feel part of the brand’s evolution.
• Offered premium features at mid-range prices, breaking the industry norm that premium technology must come at a high cost.

Haier: Redefining Home Appliances with Smart Customisation

Haier, a Chinese home appliance manufacturer, faced stiff competition from brands like LG and Samsung. Instead of competing on price or features, Haier created a Blue Ocean by shifting from mass-market production to customisable, smart home solutions.

How Haier applied Blue Ocean Strategy:

• Moved away from one-size-fits-all products to offer fully customisable refrigerators and washing machines, allowing customers to design their own appliances.
• Integrated Internet of Things (IoT) technology, turning home appliances into smart devices that interact with users.
• Created a direct-to-consumer model, reducing reliance on third-party retailers and building stronger customer relationships.

AirAsia: Making Air Travel Affordable for the Masses

Before AirAsia, air travel in Asia was largely dominated by full-service airlines, which catered to business travellers and premium passengers. AirAsia created a Blue Ocean by introducing low-cost flights, making air travel accessible to millions of people who had never flown before.

How AirAsia applied Blue Ocean Strategy:

• Eliminated unnecessary airline luxuries, such as free meals and assigned seating, to reduce costs.
• Created new demand by targeting price-sensitive customers who previously relied on buses and trains for long-distance travel.
• Built an innovative direct-booking model, allowing passengers to book flights online instead of relying on travel agents.

These examples show how Asian MNCs have successfully applied Blue Ocean Strategy to reshape their industries. However, when applying this framework in assignments, many students make avoidable mistakes that weaken their analysis.

Common Mistakes Students Make in Assignments

Confusing Blue Ocean with Differentiation Strategy

• Mistake: Assuming that any company with a unique product is using Blue Ocean Strategy.
• Correction: Blue Ocean is about creating a new market space, not just standing out within an existing industry. For example, Haier’s smart home customisation model created an entirely new market for home appliances, while a standard premium appliance upgrade would be a differentiation strategy.

Thinking Blue Ocean Always Means Being First to Market

• Mistake: Believing that a company must invent something completely new to apply Blue Ocean Strategy.
• Correction: A Blue Ocean can be created by restructuring an existing market. Grab did not invent food delivery or mobile payments, but by integrating these services into a single super app, it reshaped how consumers engage with everyday services.

Failing to Show How a Company Eliminates Competition

• Mistake: Only describing a company’s innovation without explaining how it removes competition.
• Correction: Blue Ocean companies shift customer expectations and redefine industry rules. AirAsia eliminated luxury services to offer ultra-low fares, removing the need to compete with full-service airlines.

Not Evaluating the Long-Term Sustainability of a Blue Ocean

• Mistake: Assuming that a Blue Ocean remains uncontested forever.
• Correction: Competitors eventually enter new markets, forcing businesses to continuously innovate. Xiaomi, for example, initially had an advantage with its online-only sales model, but as competitors adopted similar strategies, it had to expand into new product categories like smart home devices.

Blue Ocean Strategy vs. Other Strategic Frameworks: When to Use It

Blue Ocean Strategy vs. Porter’s Generic Strategies

• Blue Ocean Strategy creates new market space, while Porter’s strategies focus on competing within existing industries.
• Use Blue Ocean Strategy when a company wants to break industry boundaries rather than compete on cost or differentiation.

Blue Ocean Strategy vs. Ansoff Matrix

• Ansoff Matrix helps businesses decide whether to enter new markets or develop new products, while Blue Ocean Strategy focuses on reshaping an industry altogether.
• Use Blue Ocean Strategy when a company wants to make competition irrelevant, not just expand its reach.

Blue Ocean Strategy vs. Disruptive Innovation

• Disruptive innovation is when a company introduces a simpler, cheaper, or more accessible product that gradually takes over an industry.
• Use Blue Ocean Strategy when a company wants to redefine industry expectations rather than compete within an existing framework.

Final Thoughts

Blue Ocean Strategy has helped companies like Grab, Xiaomi, Haier, and AirAsia break free from traditional competition and create new market spaces. However, when applying this framework in assignments, you must:

• Clearly show how a company eliminates competition.
• Avoid confusing Blue Ocean with differentiation.
• Analyse long-term sustainability and how competitors may react.

By applying deeper critical thinking, you will produce stronger, more strategic business reports that demonstrate a true understanding of how businesses innovate.