Red Ocean vs Blue OceanBlue Ocean. You may think that Chan Kim and Renee Mauborgne may fall into the category of trying to coin new words to set their concepts apart, but there is method to the madness. The concept is quite simple to understand. The Red Ocean is where every industry is today. There is a defined market, defined competitors and a typical way to run a business in any specific industry.
Red Ocean Strategy V/S Blue Ocean Strategy
This blog article is a overview of some of the key points of the book by W. 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. Click the link above or the picture below to read more. Interested in buying the book? Blue oceans strategy is the approach that suggests a company is better off searching for ways to play in uncontested market places instead of engaging with competition in existing marketing spaces. It is the idea of trying to find market spaces that are free of competitors by creating and caputuring new demand, making the competition irrelevant. An exmaple of a blue ocean strategy is Netflix.
To understand red ocean strategy let us begin by defining blue ocean strategy. Blue Ocean Strategy is where a company creates a completely new market space or market category. 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. You can think of a blue ocean being a place where the sailing is easy uncontested with clear water if you can successfully introduce an offering. Blue Oceans can be thought of as markets that do not exist yet. The microwave oven would have been a blue ocean in the s.
Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant. It is based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions and beliefs of industry players. In their classic book, Blue Ocean Strategy , W. Red oceans are all the industries in existence today — the known market space.
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Red Ocean Strategy Disadvantages
It can be difficult to succeed with the cutthroat competition in the business environment today. Luckily, there are many strategies you can use in order to gain an edge on your competition. Red Ocean Strategies: A red ocean strategy involves competing in industries that are currently in existence. 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. For this strategy, the key goals are to beat the competition and exploit existing demand. Blue Ocean Strategies: A blue ocean strategy is based on creating demand that is not currently in existence, rather than fighting over it with other companies. Most blue oceans are created from within red oceans by expanding existing industry boundaries.
As established markets become less profitable, companies increasingly need to find ways to create and capture new markets. Despite much investment and commitment, most firms struggle to do this. What, exactly, is getting in their way? The authors of the best-selling Blue Ocean Strategy have spent over a decade exploring that question. To succeed in the long term, companies must find ways to create new markets. Competing in existing markets is growing less profitable.