...Introduction In the current competitive market, businesses often adopt several strategies so as to compete effectively. These strategic moves are usually derived from market – competing strategies. Innovation and creativity are the keys whereby organizations can focus on finding and creating new market spaces resulting in the opening of the new market and increasing their profit margins. The term “Blue Ocean” denotes all the industries that are not in existence today (Kim & Mauborgne, 2004). It includes unknown market and is untainted by competitions. In blue oceans, demand is created rather than fought over. Thus, there is an ample opportunity for growth that is rapid and profitable too. On the other hand "Red Ocean" is regarded as the existing market space with numerous risks and limited opportunities with limited profit margin, whereby companies strive to sustain their position (Gruwer, 2014). The companies operate in saturated market conditions with numerous small and big players and try hard to exploit the demand of customers. Blue Ocean Strategy Blue ocean strategy is the new way of thinking, a new strategic mind – set, a bold and new path to winning the future. It is grounded in analysis and energizes everyone. Blue ocean strategy focuses on creating new markets rather than competing with existing ones so as to stand apart and keep the cost lower. The organizations adopting blue ocean strategy can create new market space, create new demands, focus on innovation and avoid...
Words: 1226 - Pages: 5
...at INSEAD. This article is based on their book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Harvard Business School Press, 2005). orporate strategy is heavily influenced by its military roots. The very language of strategy is imbued with military references – chief executive ‘‘officers’’ in ‘‘headquarters’’, ‘‘troops’’ on the ‘‘front lines.’’ Described this way, strategy is about confronting an opponent and fighting over a given piece of land that is both limited and constant. Traditionally, strategy focused on beating the competition, and strategic plans are still couched in warlike terminology. They exhort companies to seize competitive advantage, battle for market share, and fight over price. Competition is a bloody battlefield. C The trouble is that if the opposing army is doing exactly same thing, such strategies often cancel each other out, or trigger immediate tit-for-tat retaliation. Strategy quickly reverts to tactical opportunism. So where should companies turn for a more innovative approach to strategy? The answer lies with something we call blue-ocean strategy. We argue that head-to-head competition results in nothing but a bloody red ocean as rivals fight over shrinking profits. Success comes not from battling competitors, but from making the competition irrelevant by creating ‘‘blue oceans’’ of uncontested market space. The creators of blue oceans don’t use the competition as their benchmark. Instead, they follow...
Words: 3892 - Pages: 16
...companies that wish to beat the market competition. The paper analyses the practical application of Blue Ocean strategy in case of Indian companies. This paper also discusses the risk factors/negatives associated with the emergence of application of Blue Ocean Strategy in India/worldwide. 1. Introduction According to the well-known authors and management thinkers, W. Chan Kim and Renee Mauborgne, ‘the only way to beat the competition is to stop trying to beat the competition’. According to them, the entire market universe can be divided into two oceans: Red Ocean and Blue Ocean. Red Ocean is representative of all such industries/products which already exist and are thus representative of the known market space. Blue Oceans denote the industries/products not in existence today. Blue Oceans thus represent the unknown market space. In the Red Ocean industry boundaries are defined and well accepted. This means the existing competition is well known in the market space and the players in the market try to outperform their rivals to get greater share of the existing market demand. As existing market space gets crowded prospects for good profit and growth in future are reduced. Products then lose their distinctiveness and become regular commodities resulting in cut throat market competition thus turning Red Ocean more red or bloodier. Blue Ocean in contrast is defined by untapped market space, opportunities for highly profitable growth and possibility for new demand creation. [1] 2...
Words: 3483 - Pages: 14
...BLUE OCEAN STRATEGY by W Chan Kim & Renee Mauborgne “Large R & D Budgets are not the key to creating new market space. The key is making the right strategic moves.” The article “Blue Ocean Strategy” by W Chan Kim and Renee Mauborgne published in the year 2005 talks about creating an uncontested market space through intelligent strategic moves. By analyzing thirty different industries across a century the writers opined that sustaining high performance standards in an overcrowded industry might not be enough for being a leader or having the major chunk of the market pie. It is possible only by altering boundaries of the currently existing industries. Red ocean strategies as referred by the authors represent all the industries today where each and every company fights fiercely to gain the market space. The process of outperforming the competitors incurs huge cost and hence plummet the margins. The products turn into commodities leading to heavy competition and hence the market space turns bloody. On the other hand, Blue Ocean strategy demand is generated from boundaries outside the domain of the industry. Sometimes this might lead to generation of altogether new industry. The authors have lucidly explained in the article how Cirque Du Soleil was able to create its own market space in a dying Circus industry whose performances were marred by people’s concerns for animals. Cirque was able to tweak the boundaries of both theater and circus industry and rejuvenated the Circus...
Words: 463 - Pages: 2
...Mauborgne authors of BLUE OCEAN STRATEGY 1) What is a blue ocean strategy? Kim & Mauborgne: Blue Ocean Strategy is a way to make the competition irrelevant by creating a leap in value for both the company and its customers. 2) What are red and blue oceans, and why do you use the colors red and blue? Kim & Mauborgne: We use the terms red and blue oceans to describe the market universe. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Hence, the term “red” oceans. Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Like the “blue” ocean, it is vast, deep, powerful, in terms of profitable growth, and infinite. 3) How does blue ocean strategy fundamentally...
Words: 2412 - Pages: 10
...in what some would call a neglected or unusual market place. The book was recognized by the Wall Street Journal as a best seller, along with numerous other recommendations and acknowledgments from industry giants. Blue Oceans was written by two authors with the intent to show that companies can succeed not by battling competitors, but rather by creating ″blue oceans″ of uncontested market space (Brooks, 2013). When examining the Blue Ocean Strategy one must take the time to understand the thought process fully. There must be a willingness to abandon the practices and strategies that are commonly thought of today as the norm and amerce oneself into the Blue Ocean Strategy. The Blue Ocean Strategy is a methodology that encompasses the theory that there are two oceans. The first being a red ocean. The red ocean can be described as the common businesses that are seen every day. Within the red ocean there are boundaries and limitations that are accepted in industry and competition is clearly defined. While blue oceans in contrast denote all the industries not in existence today, the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored (Brooks, 2013). The...
Words: 721 - Pages: 3
...strategy’s roots in military strategy. The very language of corporate strategy is deeply imbued with military references—chief executive “officers” in “headquarters,” “troops” on the “front lines,” and fighting over a defined battlefield.1 Industrial organization (IO) economics gave formal expression to the prominent importance of competition to firms’ success. IO economics suggests a causal flow from market structure to conduct and performance.2 Here, market structure, given by supply and demand conditions, shapes sellers’ and buyers’ conduct, which, in turn, determines end performance.3 The academics call this the structuralist view, or environmental determinism. Taking market structure as given, much as military strategy takes land as given, such a view drives companies to try to carve out a defensible position against the competition in the existing market space. To sustain themselves in the marketplace, practitioners of strategy focus on building advantages over the competition, usually by assessing what competitors do and striving to do it better. Here, grabbing a bigger share of the market is also seen as a zero-sum game in which one company’s gain is achieved at another company’s loss. Hence,...
Words: 7586 - Pages: 31
...Blue Ocean Strategy 1. Introduction According to the well-known authors and management thinkers, W. Chan Kim and enee Mauborgne, ‘the only way to beat the competition is to stop trying to beat the competition’. According to them, the entire market universe can be divided into two oceans: Red Ocean and Blue Ocean. Red Ocean is representative of all such industries/products which already exist and are thus representative of the known market space. Blue Oceans denote the industries /products not in existence today. Blue Oceans thus represent the unknown market space. In the Red Ocean industry boundaries are defined and well accepted. This means the existing Competition is well known in the market space and the players in the market try to outperform their rivals to get greater share of the existing market demand. As existing market space gets crowded prospects for good profit and growth in future are reduced. Products then lose their distinctiveness and become regular commodities resulting in cut throat market competition thus turning Red Ocean more red or bloodier. Blue Ocean in contrast is defined by untapped market space, opportunities for highly profitable growth and possibility for new demand creation. 2. Understanding Creation of Blue Ocean – Value Innovation According to the W. Chan Kim and Mauborgne, most of the blue oceans that are created emerge within the existing red oceans by expanding existing industry boundaries. However some blue oceans can also be created...
Words: 3177 - Pages: 13
...and Renee Mauborgne authors of BLUE OCEAN STRATEGY 1) What is a blue ocean strategy? Kim & Mauborgne: Blue Ocean Strategy is a way to make the competition irrelevant by creating a leap in value for both the company and its customers. 2) What are red and blue oceans, and why do you use the colors red and blue? Kim & Mauborgne: We use the terms red and blue oceans to describe the market universe. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Hence, the term “red” oceans. Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Like the “blue” ocean, it is vast, deep, powerful, in terms of profitable growth, and infinite. 3) How does blue ocean strategy fundamentally differ...
Words: 2412 - Pages: 10
...blue oceans of uncontested market space. The Apple Ipad and Kindle Fire would be considered Blue Ocean products as oppose to Red Ocean products. Apple achieved a worthy invention by designing the Ipad, which led to the creation of a new market space. Apple intrigued consumers with the limits of the space by educating customers on its comprehensible use. Amazon introducing the Kindle Fire shortly after the Ipad which targeted non-Ipad users and defined its own name by developing the Kindle Fire as a media savvy device with prominent features enabled by Amazon’s massive media platform. Both of these similar but distinctive products made the competition irrelevant. According to Kim and Mouborgne (2004), “Blue Ocean strategy is simply creating an uncontested market space and defining its boundaries rather than competing in the confines of an existing industry”. As the space for products get more and more crowded, projections for profits and growth are condensed. Blue oceans represent all the industries not in existence today in the unidentified market space, untainted by competition (Kim and Mouborgne, 2004). In blue oceans, demand is created rather than fought over. There is sufficient opportunity for growth that is both profitable and prompt. Companies can give rise to completely new industries and in most cases, a blue ocean is created from within a red ocean when a company alters the boundaries of an existing industry. Apple did not invent the space for a tablet once they launched...
Words: 748 - Pages: 3
... Blue Ocean Strategy An old wives tale states, “there’s nothing new under sun” and some would believe that to be true. However authors W. Chan Kim and Renee Mauborgne proved that theory wrong, with the development of the blue ocean strategy, which was adopted by corporations in different industries. Nintendo’s one company that utilized the blue ocean strategy to pull their company out of the red ocean, which is the gaming industry. Today’s analysis will discuss, competition, differentiation, and the four action framework, which is the basis of the strategy. In addition the analysis will look at pros and cons and relevance. Competition & Differentiation Authors W. Chan Kim and Renee Mauborgne wrote Blue Ocean Strategy in 2005. Their research encompassed over 150 strategic moves, utilized for the past 100 years, and spanning over 30 industries. (Brooks, 2013). The book dispels the notion that one must outdo its competitors to achieve success in the market in which it operates. Three main areas are covered in length, with the first being competition. The authors argue corporations will not achieve success battling competitors, who when examined operate and likely offer similar products and services. One cannot outperform its competitor and therefore must adopt a different mindset. One where the firm itself becomes its own competitor, by creating new market space. When firms create new market space, they eliminate competition and become stronger as a company. Differentiation...
Words: 860 - Pages: 4
...existing and new markets from now to 2018?” 12th Nov 2009 INTRODUCTION With the rapid socio-economic development and national policies tilt on education, strategic management at the university became increasingly important. Some schools use strategic management in facing the challenges and catch the opportunities brought by environmental changes to earn improvements and thus to achieve a historic leap forward. Competition exists in every field not only in similar businesses, but also in other industries that offering competing products or services (Stacey 2007). The only way to surge ahead of competitors is to have new approaches in the competition. Strategic management principles of the institution must be innovative and creative. It is important because all the organizations are trying to employ traditional methods and this can mean a closer competition level. This essay will discuss the main strategies in existing and new markets of the University of East Anglia under the current situation of UEA in the whole UK educational industry. New market space New market space is the creation or reinvention of existing products in such a way that it must appeal to the existing customers as well as a whole new group of customers. The products offered must be unique in every aspect and it should make the organization a clear leader in that particular market segment. According to Hitt et al., (2008) “Imagine a market universe...
Words: 2303 - Pages: 10
...strategy in marketing is a unique approach to building a customer base. Instead of trying to compete in an overcrowded marketplace with existing companies, a Blue Ocean strategy seeks to build an entirely new market area. With the rapid growth of technology and globalization, the importance of a Blue Ocean strategy has grown in recent years. The “Blue Ocean strategy” is a term that originated from the 2005 book, The Blue Ocean Strategy, by W. Chan Kim and Renee Mauborgne that describes the opportunities of vast, untapped market spaces, or "Blue Oceans," that can be developed by expanding market boundaries or launching new industries. The concept of "Blue Ocean strategy" was first acknowledged by the business world in 2005 when the correspondence was initially released. In essence, Blue Oceans are associated with high potential profits. Since it’s released it has been translated in 43 languages. The authors discuss the benefits for business owners to leave the Red Ocean, characterized by the bloody, shark-infested waters of competition, and enter the Blue Ocean, where there is no competition and limitless space to create something new. According to inserts found throughout the book, it is important to evaluate your business to determine whether you should rethink your market strategy and enter the "Blue Ocean." The most important feature of Blue Ocean strategy is that it disregards the basic principles of conventional strategy: that a trade-off exists between value and cost...
Words: 849 - Pages: 4
...Digital and Physical Spaces D. Johnson BUS: 620 Managerial Marketing Pamela Gordon April 03, 2012 Digital and Physical Spaces Having a digital and a physical presence for an organization is necessary in order to reach potential market segments. Theoretically, organizations must determine if the need for internet or new-economy based strategy is necessary. While some organizations may need to establish a physical presence, others may choose to offer their products online due to availability of new economy marketing strategies. Economy Based Marketing Strategies The availability of new economy based marketing strategies allows organizations (who are location based) to create an online presence. Fortunately, this allows them to adapt to changes in the way organizations communicate with customers. For instance, Apple first started out with retail stores and eventually created app stores. One article states: Apple Stores/iTunes come in at No. 7 this year. Nationwide brand recognition and devout customer loyalty for its line of mp3 players, smart phones, computers and tablet devices has helped boost both in-store and online hardware and download sales. Apple Stores/iTunes' sales grew 32.3 percent in 2010 (Anonymous, 2011, para. 7). Communicating with Customers Like Apple, many organizations opt to create an online presence. Creating an online presence makes communicating with customers easier. For example, new applications allow organizations...
Words: 637 - Pages: 3
...Zackery-Graham, Cassandra Jenkins, Paige McLester, Felishia Phillips, Chalese Sydnor MKT421 April 12, 2012 C. Jeanine Fulton General Electric Final Marketing Plan In today’s business community, the complexity of inventing new products and services is vital to expanding a company’s brand. Organizations are challenged with anticipating consumer’s needs and wants during the concept phase of creating the next company innovation. Products and services are the foundation of an organization existence. Incorporating new merchandise in a competitive marketplace and making it an exceptional product is always a challenge for any business. General Electric throughout history has embraced the challenge of creativity, innovation and meeting the needs of the consumer. This final marketing plan will describe General Electric’s new GE Space Saver Model 2012 marketing plan to create and bring to market a modern refrigerator that will save consumers time, money, space, and energy. This final marketing plan will provide an overview of the appropriate place and promotion strategy used to develop General Electric’s GE Space Saver. This market plan will summarize the promotion schedule and advertising plan, identify public relations opportunity for the GE Space Saver, analyze the effects of channel management decisions on marketing, select the appropriate distribution channel, address cost for placement, shipping, and middlemen, and develop a budget plan. The plan will also identify...
Words: 5755 - Pages: 24
