Difference Between Blue Ocean And Red Ocean Strategy Pdf

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difference between blue ocean and red ocean strategy pdf

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Are you a five-forces disciple or a blue-ocean enthusiast? That is, do you try to dominate existing markets or look for opportunities to create new ones? Both approaches to strategy have their devotees, but to the best of our knowledge, no one before now has conducted an empirical study comparing the two camps.

Blue Ocean Strategy

Every entrepreneur wishes their company was the only one in the market. No competitors, having all the customers to themselves. King of the castle ruling unchallenged over the country. These entrepreneurs and we will talk about three of them later have led their companies to great success by applying Blue Ocean Strategy. 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. The book shows the results of a study of strategic moves spanning more than years across 30 industries.

Since its first edition, Blue Ocean Strategy has been revised and expanded in and has become a bestseller with over 4 million copies sold in 46 languages. The book is recognized as one of the most iconic and impactful strategy books ever written and is the recipient of numerous distinguished awards. Both authors received widespread recognition for their work in the form of various awards and distinctions. In Blue Ocean Strategy, red ocean is a metaphor for the known market space encompassing all the industries in existence today.

Remember the documentaries that showed the audience what happens when a large number of sharks feed at the same time, in the same place? Blue ocean is the metaphor for the unknown market space and all the industries that are not in existence today. Founded in in Canada, Cirque du Soleil is an entertainment company and the largest contemporary circus producer in the world.

By taking out live animal acts from their performances and focusing on creating storyline-based shows with live music and amazing acrobats, Cirque du Soleil has created a new market space and new demand: circus entertainment for adults. More than million spectators have seen a Cirque du Soleil production since worldwide. By allowing homeowners to monetize their spaces and travellers to book them instead of hotels, Airbnb has found a new market, a big one.

Although Uber is operating in the people moving industry, it is not a taxi company, but a ridesharing service. The latest stats say there are 21 million trips a day taken by million monthly active platform consumers located in over cities across 69 countries. To achieve value innovation, the company looks at two factors: cost savings and buyer value.

The company makes cost savings by eliminating and reducing the factors an industry competes on and lifts buyer value by raising and creating elements the industry has never offered. Many businesspeople believe that lowering costs and increasing value is a trade-off. Blue Ocean Strategy allows companies to pursue differentiation and low cost simultaneously. A great starting point for achieving value innovation is to answer the following questions devised by Chan Kim and Renee Mauborgne in the Four Actions Framework :.

In conclusion, to find your blue ocean, namely to tap into a new market, you need to perform an innovative leap in customer value at lower costs thus making the competition irrelevant.

Please leave this field empty. Blue Ocean Strategy: How to differentiate from the competition. Share this May 13 13 min read. Who created Blue Ocean Strategy? Differences between Red Ocean Strategy and Blue Ocean Strategy in business and leadership 3 brands that have differentiated from the competition, generated new demand and found a new market How to create a blue ocean for your company through value innovation What is Blue Ocean Strategy?

Differences between Red Ocean Strategy and Blue Ocean in business and leadership In Blue Ocean Strategy, red ocean is a metaphor for the known market space encompassing all the industries in existence today.

Airbnb launched in , Uber — one year later. The concept of Value Innovation is the cornerstone of the market-creating strategy. Chan Kim and Renee Mauborgne But how does one achieve value innovation? A great starting point for achieving value innovation is to answer the following questions devised by Chan Kim and Renee Mauborgne in the Four Actions Framework : Which of the factors that the industry takes for granted should be eliminated? What factors should be created that the industry has never offered?

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Blue Ocean vs. Five Forces

Despite a long-term decline in the circus industry, Cirque du Soleil profitably increased revenue fold over the last ten years by reinventing the circus. Rather than competing within the confines of the existing industry or trying to steal customers from rivals, Cirque developed uncontested market space that made the competition irrelevant. Cirque created what the authors call a blue ocean, a previously unknown market space. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.


Red Ocean strategies compete in existing markets which is referred to head to head competition, where as Blue Ocean strategies exist in creation of new markets which captures the new demand.


Blue Ocean vs. Five Forces

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Blue Ocean Strategy & Shift Tools

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.

Red oceans are all the industries in existence today — the known market space, where industry boundaries are defined and companies try to outperform their rivals to grab a greater share of the existing market. Cutthroat competition turns the ocean bloody red. Blue oceans denote all the industries not in existence today — the unknown market space, unexplored and untainted by competition. The chart above summarizes the distinct characteristics of competing in red oceans Red Ocean Strategy versus creating a blue ocean Blue Ocean Strategy.

Red Ocean Strategy

Every entrepreneur wishes their company was the only one in the market. No competitors, having all the customers to themselves. King of the castle ruling unchallenged over the country. These entrepreneurs and we will talk about three of them later have led their companies to great success by applying Blue Ocean Strategy. Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand.

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They all serve important purposes. Which is Better? Within a red ocean where a bunch of competitors are fighting it out, eventually one of the companies will embrace innovation and change, creating a blue ocean and sustaining growth. Blue Ocean Strategy - Summary and Examples 1.

1 Comments

  1. David O. 25.05.2021 at 02:04

    first published in in the book/manual 'blue ocean strategy, by W. Chan Kim and The main differences between the last two theories are that Gartner is.