The concept of ideal strategy and its realization using white ocean. Achieved via the delivery of features that have a highest marginal benefit to customer needs. Blue ocean strategy is a concept that has been pioneered by insead professors, w. The database and research have continued to expand. Blue ocean vs red ocean strategies 6 major differences. Blue oceans, in contrast, denote all the industries not in existence today. Student questions i need company who is in red ocean. The insead blue ocean strategy institute is dedicated to extending the research on blue ocean shift, blue ocean strategy, and blue ocean leadership by chan kim and renee mauborgne and disseminating it to professors, researchers and practitioners around the globe. This post defines blue ocean strategy and explores a few examples while pointing out the five main risks of pivoting in the search for a. Canon copier industry case study blue ocean strategy. A good example of red ocean strategy is the european airline ryanair. How to create uncontested market space and make the. The field of marketing has placed great emphasis on using ever finer market. Everyone from first graders to senior citizens use it.
The blue ocean strategy is particularly needed when supply exceeds demand. Importance of the blue ocean strategy to a business. How to create uncontested market space and make the competition irrelevant, a. The goal of a blue ocean strategy is for organizations to find and develop blue oceans uncontested, growing markets and avoid red oceans overdeveloped, saturated markets. Companies pursue blue ocean strategies to make competition irrelevant. If youre competing against companies that use a range of competitive strategy, it can difficult to come up with a different plan that helps you stand out. Blue ocean strategy is where a company creates a completely new market space or market. But, lets first understand what is blue ocean and how it is different from red ocean strategy. Using bos to create new market space in sustainability. Analysis of the use of the blue ocean strategy, case study analysis on 14. In blue oceans, demand is created rather than fought over. They assert that these strategic moves create a leap in value for the company, its buyers, and its employees while unlocking new demand and making the competition irrelevant.
It requires the right research, patience and focus. Do businesses use their diverse, competitive strategies in a particular market. Of course, the blueocean approach to this model would call. Red ocean strategy aligns the whole system of the company. Although porters concepts may be unfamiliar to you, they are certainly worth the difficulty required to learn their central concepts. Of the many strategic planning models that exist, the blue ocean strategy could be considered the pacifist of the group. Blue ocean strategy challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant. Many readers may be familiar with the 2005 global bestselling book blue ocean strategy by professors renee mauborgne and w. Discussion blue ocean strategy versus red ocean strategy every blue ocean company would ultimately reach to the level of red ocean category as. Kim and mauborgne established the sequence of blue ocean strategy, as the name states, to guide companies in the development and implementation. This post defines blue ocean strategy and explores a few examples while pointing out the five main risks of pivoting in the search for a rich blue sea without competitors.
Red oceans, where competition is fierce in bloody waters, strategy centers around beating rivals, and wins are often zerosum. This new market space is created by launching new offerings, with the aim being to make the competition irrelevant so that an organization can grow, uncontested, at least in the beginning. Using a framework like porters five forces can be a straightforward way to get this competitive analysis done. Whichever is chosen the organization must align all activities with one of these strategic directions. Red oceans are described as all the industries in existence today. To contribute to the practice and performance of companies, governments and. Let me try to explain this in simple terms for the benefit of everyone. Implementing the blue ocean strategy is, simply put, a gargantuan task. The concept of blue ocean strategy first took the business world by storm in 2005 when authors w. Mar 10, 2015 back in 2008, i wrote a paper on blue ocean strategy which was published at the international conference on management. Blue ocean strategy powerpoint templates present better.
The authors discuss the benefits for business owners to leave the red ocean. Firms trying to tap into new markets for growth often fall into the traps of putting resources into. Blue ocean strategy including examples and pdf download. For this strategy, the key goals are to beat the competition and exploit existing demand. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Sep 24, 2017 blue ocean strategy requires a different mindset. The research focused on discovering the common factors that lead to the creation of blue oceans and the key differences that separate those winners from the mere survivors and those adrift in the red ocean. Chan kim and renee mauborgne, professors at insead. Blue ocean strategy the blue ocean approach is a strategic tool that helps innovation strategists asses current and desired future strategic states whereasred ocean is a current state. The authors wrote that blue ocean strategy is a theory that targets companies that are fighting for market share. Their iconic and impactful books, blue ocean strategy and blue ocean shift, provide a systematic approach to making the competition irrelevant and tools any organisation can use to shift from red oceans of bloody competition to blue oceans of new market space. Michel porter supports to compete in existing market space, beat the competition, exploit existing demand, make the valuecost tradeoff, align the whole.
Blue ocean strategy and its implications for businesses. The extent to which companies may succeed in the green ocean strategy, as will be explained in this paper, depend on its ability to. The authors discuss the benefits for business owners to leave the red ocean, characterized by the bloody, sharkinfested. In their 2017 new york times bestselling book, blue ocean shift, kim and mauborgne share how to put these practical marketcreating tools into practice to move from red to blue oceans and to do so in a way that people own and drive the process.
Instead of dividing up existingand often shrinkingdemand and benchmarking competitors, blue ocean strategy is about growing demand and breaking away from the competition. See comparison between red and blue ocean strategies here in one simple table. Blue ocean strategy is where a company creates a completely new market space or market category. Sep 03, 2019 the frameworks offered in blue ocean strategy, on the other hand such as the strategy canvas and the four actions framework are specifically aimed at helping companies to come up with new. Compete in existing market space create uncontested market space beat the competition make the competition irrelevant exploit existing demand create and capture new demand make the valuecost tradeoff break the valuecost tradeoff align the whole system of a firms activities with its strategic choice of differentiation or low cost. Oct 18, 2018 the most important characteristic of blue ocean strategy bos is that it rejects the fundamental principles of conventional strategy. Digital marketing agencies and online business can often benefit by doing some strategic business planning. An analytical study of red ocean and blue ocean strategy. How to create uncontested market space and make the competition irrelevant, a book by professors w. Blue ocean strategy can be applied across sectors or businesses. Buyer utility the value proposition must provide exceptional utility to the customer. Back in 2008, i wrote a paper on blue ocean strategy which was published at the international conference on management.
Looking at entire industries in this way allows you to tell over time whether an innovation strategy or a competitive strategy is best. Pdf impact of blue ocean strategy on organizational. The value of having a blue ocean strategy is better understood when compared to a red ocean strategy. What are some successful examples of blue ocean strategy. Cell phones, and particularly smart phones manufacturers, are in red oceans. Boss studies show that successful companies that created blue oceans pursued both differentiation and low cost simultaneously, in stark contrast to porters influential view porter 1985 of pursuing either low cost or differentiation strategies to avoid. Companies should instead look for new market space and ways to reinvent the industry. Blue ocean strategy is based on over decadelong study of more than 150 strategic moves spanning more than 30 industries over 100 years. The risks of following a blue ocean strategy the adaptive. Based on an eponymously titled book, this strategy argues that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. The mental models that undermine marketcreating strategies.
Blue ocean strategy supports to create uncontested market space. To understand red ocean strategy let us begin by defining blue ocean strategy. Value innovation strategy competes in an uncontested market space. While the red ocean strategy is a head to head battle where. Many companies find themselves struggling and to hold on to competition and market shares these companies are trapped in the sphere of a competition.
Let us say the market that we operate is an ocean cle. Chan kim and renee mauborgne focused on discovering the common factors that lead to the creation of blue oceans and the key differences that separate those winners from the mere survivors and those adrift in the red ocean. The evolution of blue ocean strategy vivechan international journal. These systems started to gain popularity in the 1970s with consoles that played only pong. Imagine an industry like solar power or cancer research. In the book, they introduced the concepts of red and. Pdf abcd analysis of red ocean strategy researchgate. By examining the success elements of 150 companies in over 30 industries, founders of the blue ocean concept realized patterns of strategic thinking in the creation of new market spaces which was the basis for the blue ocean strategy. This blog article takes a look at what kind of roi some companies have achieved by implementing a blue ocean strategy by w. Blue ocean businesses create new markets, new demand, and often give the business insulation against competition. It seems that most all of the fortune companies play in red oceans. This strategy, which is based on extensive research of hundreds of companies spanning across decades and including several industries, proclaims that instead of battling competitors, companies can create new markets for themselves. In this article you will learn how to make your competition irrelevant and have sales and profit growth in excess of anything you thought was even possible. The frameworks offered in blue ocean strategy, on the other hand such as the strategy canvas and the four actions framework are specifically aimed at helping companies.
This blog article takes a look at what kind of roi some companies have achieved by implementing a blue. Blue ocean strategy is referred to a market for a product where there is no competition or very less competition. Blue ocean shift is packed with realworld examples of organizations facing the same constraints we all face be they politics, bureaucracy, or limited resources that applied the very tools and process outlined in the book to shift from competi. A company will have more success, fewer risks, and increased profits in a blue ocean market. How to use porters five forces model in digital marketing. Impact of blue ocean strategy on organizational performance. This strategy revolves around searching for a business in which very few firms operate and where there is no pricing pressure. Discussion blue ocean strategy versus red ocean strategy every blue ocean company would ultimately reach to. While they are generally perceived to be more exciting and innovative, there are still major opportunities in traditional red ocean businesses when companies apply rethinking and some adjustments. Learn about red ocean strategy and how it differs to blue ocean strategy.
Red ocean strategy, blue ocean strategy, innovation, room. Canon copier industry case study blue ocean strategy example. Specifically, companies that are fighting in a fiercely competitive market which contains major players, i. In red ocean companies try to surpass their rivals to take hold of a greater share of existing demand. Red ocean strategy is a strategy which aims to fight and thrash the competition. The authors acknowledge that most companies including blue ocean companies operate within a red ocean industry.
A good example of red ocean strategy is the european airline operator ryanair or southwest if you like in the. Before we dive into blue ocean strategy examples, lets get clear on what a blue ocean is. History and background a video game console is just a computer that is made only. Jan 23, 2017 many readers may be familiar with the 2005 global bestselling book blue ocean strategy by professors renee mauborgne and w. Chan kim and renee mauborgne have created a comprehensive set of analytic tools and frameworks to create blue oceans of new market space. Apple and samsung together dominate the smart phone market today. In red ocean strategy, companies develop a plan to knock outor killthe competition, leaving the market stained red with the blood of the defeated competitors, he said. This often requires overcoming an intense level of competition and can often involve the commoditization of the industry where companies are competing mainly on price.
Importance of the blue ocean strategy to a business bizfluent. Blue ocean strategy is a marketing theory and the title of a book published in 2004 that was written by w. This blog article is a overview of some of the key points of the book by w. Chan kim and renee mauborgne wrote a bestselling book, blue ocean strategy, which has been translated into 43 languages. A red ocean strategy involves competing in industries that are currently in existence. Blue ocean strategy and sustainability for strategic. They are competing very successfully in the already saturated red ocean of the shorthaul airline business. In simple terms, red ocean strategy is about how to outpace rivals in existing. According to the blue ocean strategy principles, companies should not only try to compete in existing markets red oceans, but. A red ocean strategy ultimately leads to an organization choosing to follow one of two strategies differentiation or low cost. It is able to achieve low costs through many methods including using. Jul 17, 2018 implementing the blue ocean strategy is, simply put, a gargantuan task.
34 139 1546 202 1042 829 780 812 1269 710 1191 1452 430 713 826 1372 867 949 1486 592 836 60 692 1484 1417 1203 1272 728 573 544 1243 503 1168 1593 520 1389 1246 944 304 369 844 1331 391 1367 1419 158 813