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Cola War

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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 well beyond existing industry boundaries. The companies which are located in the Red Oceans follow conventional approach to beat the completion by building up defensible position or by out-competing the rivals within the existing industry order. This, however many a times, leads to creation of situation in which supply exceeds the demand in the industries which are involved in the...

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