The profit is much easier than the rivalry with the. How to create uncontested market space and make the competition irrelevant, professors w. It became a huge bestseller, and remains popular today. But we believe that a blue ocean move will give the company a head start it requires to understand and conquer the existing competition. Apr 02, 2015 blue ocean strategy chan kim and renee mauborgne was released in 2005 by harvard business school press. While the book is aimed primarily at large, traditional businesses, our book club members managed to scale some of the advice to fit our needs. Blue ocean strategy value innovation strategy canvas four actions framework errc grid six paths framework pioneer migrator settler map three tiers of noncustomers sequence of creating a blue ocean buyer utility map price corridor of the mass four hurdles to strategy execution tipping point leadership fair process. What is blue ocean strategy about blue ocean strategy. Red ocean looks at cost saving or differentiation while blue ocean focuses on doing both. Like the blue ocean, it is vast, deep and powerful in terms of opportunity and profitable growth. Blue ocean strategy blue ocean strategy generally refers to the creation by a company of a new, uncontested market space that makes competitors irrelevant and that creates new consumer value often while decreasing cost.
Innovation, new market space and creating demand are central characteristics. Blue ocean strategy is a method of creating business strategy of the enterprise, which was described in a book by w. Most prominently, since 2009 the malaysian government has. Those who want to create a blue ocean strategy for their company must focus on value innovation that makes the competition irrelevant by the simultaneous pursuit of differentiation and low cost, thus creating a leap in value for the customers and an uncontested market space for the company. Michel porter supports to compete in existing market space, beat the competition, exploit existing demand, make the valuecost tradeoff, align the whole. The blue ocean strategy is a reconstructionist view of the market where no accepted boundaries or structure is present. When we think of competition between companies like coke and pepsi or walmart and costco, we think of competitors fighting to. So powerful is blue ocean strategy, in fact, that a blue ocean strategic move can create brand equity that lasts for decades. This blog article takes a look at what kind of roi some companies have achieved by implementing a blue ocean strategy by w. Blue vs red ocean endicott masters in international admin. As competition increases, prospects for profit and growth decline.
In this way, it swam into a blue ocean, offering a plastic watch at a price that allowed people to purchase two or three watches at one time. It is worth noting the organizations will move between blue oceans and red oceans over time. Sep 24, 2017 in 2005, blue ocean strategy, expanded edition. The strategy clearly brings out the fact that the only way to beat competition is to stop trying to beat it. Red ocean strategy and blue ocean strategy youtube.
This was a blue ocean opportunity staring them in the face. Blue ocean strategy red ocean strategy blue ocean strategy virgin cola red bull competed vs. There is ample opportunity for growth that is both profitable and rapid. It is based on the view that market boundaries and industry structure are not a given and can be.
Bos is all about minimizing risks due to competition threat and maximizing opportunities by exploring new boundaries. A blue ocean, as used in the title of this book and strategy, is basically uncharted territory in the business world. Blue ocean strategy is a strategy that advice companies to go to a new market, which interest customers and avoid competition from the existing market. Jul 16, 2015 the blue ocean strategy is a reconstructionist view of the market where no accepted boundaries or structure is present. Most blue oceans are created from within red oceans by expanding existing industry boundaries. It is about creating and capturing uncontested market space, thereby making the competition irrelevant. Chan kim and renee mauborgne, professors at insead and codirectors of the insead blue ocean strategy institute. A blue ocean strategy is based on creating demand that is not currently in existence, rather than fighting over it with other companies. Surface 3 and apple watch red oceans v blue oceans strategy. Red ocean strategy blue ocean strategy compete in existing market space create uncontested market space beat the competition make the. May 27, 2014 the buffer blog has exposed a blue ocean strategy by harnessing acumen for research and compiling data.
The buffer blog has exposed a blue ocean strategy by harnessing acumen for research and compiling data. Ikea has been successful in nanjing by implementing a blue ocean strategy that is. Blue ocean strategy generally refers to the creation by a company of a new, uncontested market space that makes competitors irrelevant and that creates new consumer value often while decreasing costs. Blue ocean strategy is a strategy that advice companies to go to. Blue ocean strategy case study service nsw 3 1 introduction blue ocean strategy1 has been used extensively to transform the public sector around the world at a local, state and national level. Make the valuecost tradeo align the whole system of a.
The following table is useful in highlighting the different focus areas between a red ocean and blue ocean strategy. Essay about blue ocean strategy 825 words bartleby. Blue ocean strategy is based on the idea that every enterprise can achieve higher profit by creating new demand in noncompetitive market so called blue ocean. Set sail towards your blue ocean jk beteiligung gmbh. Achieved via the delivery of features that have a highest marginal benefit to customer needs. Namun ternyata, kesuksesan sebuah perusahaan kini tidak lagi diukur dengan memenangi persaingan berdarahdarah di red ocean strategy. Strategy and thinking is not limited by preconceived barriers, and a shift happens from a focus on the supply side to a focus on the demand. Blue ocean strategy makes companies to come out of ocean of bloody competition by creating market space which is uncontested and that makes the completion irrelevant. It was built on the notion of creating new markets where competition is irrelevant and the opportunity to grow and be profitable is unlimited.
Blue ocean strategy can be applied across sectors or businesses. Blue ocean strategy implementation ikeas competitive strategy is blue ocean strategy, which led ikea create leading position in local furniture industry. The fighting results in a red sea, because much of the energy is spent competing. Blue ocean strategy is a marketing theory and the title of a book published in 2004 that was written by w. How to create uncontested market space and make the competition irrelevant by w.
They represent businesses that may not be around today, or werent around until they came on to the scene. We will introduce the aspects of red ocean strategies that most of the companies use around the world, and then we will compare the advantages and. This strategy can work in the short run but it is a lot wiser for people to fast embrace the blue ocean strategy. Jan 14, 2015 blue ocean strategy is a new way of thinking, a new strategic mindset, a bold new path to winning the future. 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. Since, dividing up existing demand and benchmarking the competitors, blue ocean strategy is regarding grow demand and break away from the competition. Chan kim and renee mauborgne, professors at insead. So far, blue ocean support relies on a data base of case studies that does not statistically analyze overall patterns. Jan 21, 2015 in their 2005 book entitled, blue ocean strategy. Blue oceans denote all the industries not in existence today the unknown market space, unexplored and untainted by competition. These systems started to gain popularity in the 1970s with consoles that played only pong. Blue ocean strategy red ocean strategy blue ocean strategy compete in existing market space. The chart above summarizes the distinct characteristics of competing in red oceans red ocean strategy.
Blue ocean strategy is a new way of thinking, a new strategic mindset, a. Welcome to blue ocean strategy were thrilled to have you on board. What is the difference between red ocean and blue ocean. To understand red ocean strategy let us begin by defining blue ocean strategy. Dec 11, 2016 blue ocean strategy blue ocean strategy generally refers to the creation by a company of a new, uncontested market space that makes competitors irrelevant and that creates new consumer value often while decreasing cost. We believe that blue ocean strategy will send you on the right path towards creating your own uncontested space. Chan kim and renee mauborgne in the indie business book club. Red ocean marketing focuses on competition in the existing market space by directly competing with others. The competition on the market is getting stronger and more difficult to overcome, in many. Competition will ultimately catch up but it typically takes about.
History and background a video game console is just a computer that is made only. Extreme openness is another blue ocean technique that buffer uses on their open blog. Chan kim, and renee mauborgne of insead, a graduate business school with locations in europe and the middle east, put forth a simple, but effective argument as to why markets should be divided into two distinctly different categories. The blue ocean strategy concerns itself with creating uncontested market space. 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.
January 21, 2015 by cbpower in business intelligence. Looking at entire industries in this way allows you to tell over time whether an innovation strategy or a competitive strategy is best. How to create uncontested market space and make the competition irrelevant, a book by professors w. The on the blue ocean strategy essay 1969 words 8 pages. Blue ocean strategy is where a company creates a completely new market space or market category. The core features of the core features of beach theory can easily a ccommodate the central assump tions of both strategic. Blue ocean strategy has helped numerous companies and organisations across the globe to create new market space and achieve pro. A marketcompeting strategy divides existing wealth between rival companies. Of course, the blue ocean approach to this model would call. This blog article is a overview of some of the key points of the book by w.
A red ocean strategy ultimately leads to an organization choosing to follow one of two strategies differentiation or low cost. The structure can be created or recreated by the steps taken by players in the market. The concept of blue ocean is based on the idea that the business universe is made up. Itu sebabnya kini hadir istilah baru yang disebut blue ocean strategy. Blue ocean strategy paper adel erolsky university of phoenix mkt421 ron rosalik august 25, 2014 blue ocean strategy paper in todays business world, competition is a big concern for nearly every corporation. You must keep in mind that there is a deeper potential of the marketplace that hasnt been explored yet. Blue ocean strategy coexists alongside red ocean strategy competitive strategy. Blue ocean strategy, outlines the processes of removing the fight for competitive advantage and the battle for differentiation typical of many corporate strategies. 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. Every blue ocean move will ultimately turn into a red ocean.
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. 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 revolves around searching for a business in which very few firms operate and where there is no pricing pressure. Value innovation strategy competes in an uncontested market space. Instead, kim and mauborgne 2005a, b, and c and kim et al. Blue ocean strategy is a book published in 2005 and written by w.
Blue ocean strategy including examples and pdf download. A good example of red ocean strategy is the european airline operator ryanair or southwest if you like in the. Whichever is chosen the organization must align all activities with one of these strategic directions. Blue ocean strategy and sustainability for strategic management. Dec 06, 2009 read this business study guide and over 89,000 other research documents. Instead of dividing up existingand often shrinkingdemand and benchmarking competitors, blue ocean strategy is about growing demand and breaking. Red ocean in blue oceans, demand is created rather than fought over. Blue ocean vs red ocean strategies 6 major differences.
The premise of the book is that companies can succeed by creating. Read this business study guide and over 89,000 other research documents. Blue ocean strategy adalah strategi menciptakan ruang pasar baru yang belum termanfaatkan. May 30, 2017 it reduced costs by using plastic instead of metal, for example, and reducing the parts in each watch from 150 to 50. Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. Jul 11, 2016 red ocean marketing focuses on competition in the existing market space by directly competing with others.
The most appropriate unit of analysis is the strategic move, the set of managerial actions and decisions involved in making a major marketcreating business offering. Blue ocean strategy is referred to a market for a product where there is no competition or very less competition. Sarah layton in blue ocean strategy on april 21, 2009. Red ocean strategy blue ocean strategy study guide. Based on the book blue ocean strategy, a red ocean is defined as a market where multiple competitors fight for the same customers. Michel porter supports to compete in existing market space, beat the competition, exploit existing demand, make. Red ocean vs blue ocean strategy red ocean strategy blue ocean strategy compete in existing market space. With a focus of not just beating your competition but making them irrelevant, blue ocean strategy is all about thinking outside the box. Blue ocean strategy is a landmark idea founded by w. Jul 30, 2017 this strategy can work in the short run but it is a lot wiser for people to fast embrace the blue ocean strategy. Successful trailblazing organizations will attract competition, creating a red ocean.
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