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. Companies pursue blue ocean strategies to make competition irrelevant. Many companies find themselves struggling and to hold on to competition and market shares these companies are trapped in the sphere of a competition. Chan kim and renee mauborgne have created a comprehensive set of analytic tools and frameworks to create blue oceans of new market space.
Importance of the blue ocean strategy to a business. Using a framework like porters five forces can be a straightforward way to get this competitive analysis done. Imagine an industry like solar power or cancer research. Canon copier industry case study blue ocean strategy example. Do businesses use their diverse, competitive strategies in a particular market.
Achieved via the delivery of features that have a highest marginal benefit to customer needs. Of course, the blueocean approach to this model would call. How to use porters five forces model in digital marketing. In simple terms, red ocean strategy is about how to outpace rivals in existing. 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 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. 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. In this article you will learn how to make your competition irrelevant and have sales and profit. According to the blue ocean strategy principles, companies should not only try to compete in existing markets red oceans, but. Pdf abcd analysis of red ocean strategy researchgate. Of the many strategic planning models that exist, the blue ocean strategy could be considered the pacifist of the group. Before we dive into blue ocean strategy examples, lets get clear on what a blue ocean is. For this strategy, the key goals are to beat the competition and exploit existing demand.
Firms trying to tap into new markets for growth often fall into the traps of putting resources into. Blue ocean vs red ocean strategies 6 major differences. 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. What are some successful examples of blue ocean strategy. But, lets first understand what is blue ocean and how it is different from red ocean strategy. Implementing the blue ocean strategy is, simply put, a gargantuan task. Red ocean strategy is a strategy which aims to fight and thrash the competition. It is able to achieve low costs through many methods including using. There strategy is focused on providing a lowcost no frills airline. 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. Michel porter supports to compete in existing market space, beat the competition, exploit existing demand, make the valuecost tradeoff, align the whole.
Pdf impact of blue ocean strategy on organizational. Using bos to create new market space in sustainability. To understand red ocean strategy let us begin by defining blue ocean strategy. Jul 17, 2018 implementing the blue ocean strategy is, simply put, a gargantuan task. Many readers may be familiar with the 2005 global bestselling book blue ocean strategy by professors renee mauborgne and w. Let us say the market that we operate is an ocean cle. Blue ocean strategy is a marketing theory and the title of a book published in 2004 that was written by w. A red ocean strategy involves competing in industries that are currently in existence. Companies should instead look for new market space and ways to reinvent the industry.
See comparison between red and blue ocean strategies here in one simple table. 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. Oct 18, 2018 the most important characteristic of blue ocean strategy bos is that it rejects the fundamental principles of conventional strategy. Red ocean strategy aligns the whole system of the company. An analytical study of red ocean and blue ocean strategy. Blue ocean strategy is based on over decadelong study of more than 150 strategic moves spanning more than 30 industries over 100 years. 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. 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. 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. The field of marketing has placed great emphasis on using ever finer market. Sep 24, 2017 blue ocean strategy requires a different mindset.
Chan kim and renee mauborgne, professors at insead. Blue ocean strategy including examples and pdf download. Blue ocean strategy is referred to a market for a product where there is no competition or very less competition. Digital marketing agencies and online business can often benefit by doing some strategic business planning.
Blue ocean strategy supports to create uncontested market space. Blue ocean strategy is a concept that has been pioneered by insead professors, w. 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. 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. A good example of red ocean strategy is the european airline operator ryanair or southwest if you like in the. But many companies have done their homework and succeeded thanks to this strategy. Whichever is chosen the organization must align all activities with one of these strategic directions. It seems that most all of the fortune companies play in red oceans.
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. Discussion blue ocean strategy versus red ocean strategy every blue ocean company would ultimately reach to. History and background a video game console is just a computer that is made only. Let me try to explain this in simple terms for the benefit of everyone. This strategy revolves around searching for a business in which very few firms operate and where there is no pricing pressure. A red ocean strategy ultimately leads to an organization choosing to follow one of two strategies differentiation or low cost. The database and research have continued to expand. In the book, they introduced the concepts of red and.
Looking at entire industries in this way allows you to tell over time whether an innovation strategy or a competitive strategy is best. Blue ocean strategy is where a company creates a completely new market space or market. In blue oceans, demand is created rather than fought over. The authors discuss the benefits for business owners to leave the red ocean, characterized by the bloody, sharkinfested. Specifically, companies that are fighting in a fiercely competitive market which contains major players, i. Apple and samsung together dominate the smart phone market today. 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. Chan kim and renee mauborgne wrote a bestselling book, blue ocean strategy, which has been translated into 43 languages. Instead of dividing up existingand often shrinkingdemand and benchmarking competitors, blue ocean strategy is about growing demand and breaking away from the competition. Blue ocean strategy is where a company creates a completely new market space or market category. The blue ocean strategy is particularly needed when supply exceeds demand. The value of having a blue ocean strategy is better understood when compared to a red ocean strategy. The authors discuss the benefits for business owners to leave the red ocean.
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. 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. 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 are described as all the industries in existence today. Value innovation strategy competes in an uncontested market space. Blue ocean strategy and sustainability for strategic. This blog article takes a look at what kind of roi some companies have achieved by implementing a blue ocean strategy by w. Impact of blue ocean strategy on organizational performance. Red oceans, where competition is fierce in bloody waters, strategy centers around beating rivals, and wins are often zerosum. 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.
Student questions i need company who is in red ocean. To contribute to the practice and performance of companies, governments and. A good example of red ocean strategy is the european airline ryanair. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. The authors wrote that blue ocean strategy is a theory that targets companies that are fighting for market share. They are competing very successfully in the already saturated red ocean of the shorthaul airline business.
It requires the right research, patience and focus. 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. 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. Although porters concepts may be unfamiliar to you, they are certainly worth the difficulty required to learn their central concepts. Kim and mauborgne established the sequence of blue ocean strategy, as the name states, to guide companies in the development and implementation. This blog article takes a look at what kind of roi some companies have achieved by implementing a blue. A company will have more success, fewer risks, and increased profits in a blue ocean market. Cell phones, and particularly smart phones manufacturers, are in red oceans. The concept of ideal strategy and its realization using white ocean.
Everyone from first graders to senior citizens use it. Blue oceans, in contrast, denote all the industries not in existence today. Buyer utility the value proposition must provide exceptional utility to the customer. How to create uncontested market space and make the competition irrelevant, a book by professors w. Canon copier industry case study blue ocean strategy. Learn about red ocean strategy and how it differs to blue ocean strategy. These systems started to gain popularity in the 1970s with consoles that played only pong. Blue ocean businesses create new markets, new demand, and often give the business insulation against competition. 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. Discussion blue ocean strategy versus red ocean strategy every blue ocean company would ultimately reach to the level of red ocean category as. 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. 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. Blue ocean strategy and its implications for businesses.
How to create uncontested market space and make the. 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. The mental models that undermine marketcreating strategies. The concept of blue ocean strategy first took the business world by storm in 2005 when authors w. Blue ocean strategy can be applied across sectors or businesses.
Back in 2008, i wrote a paper on blue ocean strategy which was published at the international conference on management. The evolution of blue ocean strategy vivechan international journal. 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. The risks of following a blue ocean strategy the adaptive. Mar 10, 2015 back in 2008, i wrote a paper on blue ocean strategy which was published at the international conference on management. Importance of the blue ocean strategy to a business bizfluent. Blue ocean strategy powerpoint templates present better. The authors acknowledge that most companies including blue ocean companies operate within a red ocean industry. Analysis of the use of the blue ocean strategy, case study analysis on 14. How to create uncontested market space and make the competition irrelevant, a. 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. Red ocean strategy, blue ocean strategy, innovation, room. While the red ocean strategy is a head to head battle where.
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