Kung Long's Big Dream of the Blue Ocean

This case discussion looks at the challenges that an enterprise might face during its transition into a new industry by describing Kung Long Corporation's transition from the stone industry to the deep-sea water industry. Kung Long's case reveals the importance of strategy formulation when an enterprise shifts into a new and unfamiliar industry. The effectiveness of strategy formulation depends not only on how well the five essential elements (i.e., arenas, vehicles, differentiators, staging, and economic logic) are integrated into the strategy (Hambrick and Fredrickson, 2001), but also on the strategy maker's awareness of the differences between industrial properties and, thereafter, changing her or his mindset accordingly (Ansoff, 1990). In this case analysis, we firstly assess Kung Long's advantages and its limitations in the deep-sea water industry. Then, we look into the two important challenges for strategy formation. First of all, we focus on Kung Long's strategy in the deep-sea water industry and analyze the integration level of the five dimensions in strategy formation (Hambrick and Fredrickson, 2001), so as to highlight the potential problems in Kung Long's current strategy. Second, we illustrate the challenge of management mentality in this transition into deep-sea water business. In this part, we discuss the differences between the stone industry and the deep-sea water industry in order to present the managerial challenges that Kung Long needs to overcome. Finally, we apply the perspective of double-loop learning (Sterman, 1994) to recommend the learning style and mentality that best suit the deep-sea water industry.