Short Essay 1_Huang Yiting (1155217220)

In week four, we discussed the blue ocean strategy’s four actions framework: eliminate, reduce, raise, and create (ERRC). Yellow Tail and the Nintendo Switch are companies that have applied this strategy and succeeded in the competitive market. This strategy reminds me of Pinduoduo, which was founded in 2015 and now has become the largest e-commerce platform in terms of users, surpassing Taobao and Jingdong.

Using the ERRC to investigate what contributed to Pinduoduo’s success, it can be found that Pinduoduo eliminates the offering of high-end products (unlike Taobao, luxuries can’t be found on Pinduoduo). Instead, it raises the variety of general products (e.g., tissue paper and cell phone cases), and at the same time, reduces the prices. Moreover, Pinduoduo enhances user experience due to its user-friendly interface and shopping policies, it creates a range of features as well, for example, “10 billion subsidies” and “group buying”. These features not only enable users to enjoy more benefits but also make online shopping more fun and become a kind of social interaction. All these approaches allow Pinduoduo to get access to and capture a market ignored by Taobao, and a social shopping mode also makes it go viral quickly in personal networks.

However, Pinduoduo’s competitors are evolving, and Taobao and Jingdong have added similar features to their platforms. Douyin has also emerged as a major player in the realm of e-commerce. The current situation leads to a question: can the blue ocean strategy work all the time, even if the market is highly competitive and saturated? The blue ocean strategy seems like magic, however, does it have any limitations? Can it be used in any markets?

We also discussed Michael E. Porter’s Five Forces, which identifies five key forces that shape a given industry: competitive rivalry, supplier power, buyer power, the threat of substitution, and the threat of new entry. This framework was introduced in an article published in the Harvard Business Review in 1979. The five forces approach is applied in analyzing a company’s current position. Nevertheless, a question is raised as to whether this frame can address issues nowadays. The industry landscapes are fundamentally different from decades ago, the developments of new media technologies have given rise to new industries, for example, e-commerce and social media. In week 4, when my team members and I tried to utilize the five forces to analyze the case of BeReal, a social media platform launched about four years ago, we found it quite difficult to analyze its supplier power. Furthermore, when it comes to other digital platforms like YouTube and Reddit, it seems that the five forces perspective loses some of its applicability.

What’s more, the five forces analysis focuses on forces that are closely related to a company and gives little attention to other external elements, for instance, politics and economics. In the 1970s, when major oil companies were constructing oil refineries in the Middle East, Shell anticipated the upcoming instability, it decided to invest in supertankers and successfully responded to the oil crisis. Rather than completely focusing on its suppliers, rivalries, and buyers, the success of Shell indicates the importance of placing the company in a broader social context and analyzing any factor that may affect the industry.

To sum up, my point is that these classical frameworks of analysis, of course, have demonstrated their utility in history, and are still serving as practical approaches for analyzing for many companies. However, given the fact that these frameworks were proposed more than a decade or even about half a century ago, updates are needed. My question is, at which aspects could these frameworks be ungraded? Besides, considering we major in New Media, are there any analytical frameworks for the new media and technology industry?