Blue Oceans Strategy

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BLUE OCEANS STRATEGY(BOS)

Competing in overcrowded industries is no way to sustain high performance. The aim of BOS is not to out-perform the competition in the existing industry, but to create new market space or a blue oceans, thereby making the competition irrelevant.BOS covers both strategy formulation and strategy execution.

Red Oceans represent all the industries in existence today - the known market space. In Red Oceans, industry boundaries are defined and accepted, and the competitive rules of the game are well understood. Here, companies try to outperform their rivals in order to grab a greater share of existing demand. As the space gets more and more crowded, prospects for profit and growth are reduced. Product turns in to commodities, and increasing competition turns the water bloody.

Blue Oceans denotes all the industries not in existence today - the unknown market space, untainted by competition. In Blue Oceans, demands is created rather than fought over. There is ample opportunities for growth that is both profitable and rapid. There are two ways to create Blue Oceans.
In few Cases, companies can give rise to completely new industries, as eBay did with the online auction industry.
But in most cases, a Blue Oceans is created from within a Red Ocean when a company alters the boundaries of an existing industry. Although the term may be new, Blue Oceans have always been with us.

Few Points about Blue Oceans Strategy:-

1. Blue Oceans are not the Technology Innovation
2. Incumbents often create Blue Oceans – and usually within their core business.
3. Company and Industry are the wrong units of analysis.
4. Creating Blue Oceans Builds Brands.

The Red Oceans Assumption that Industries structural conditions area given and firms are forced to compete within them is based on an intellectual world. Blue Ocean Strategies, by contrast, are based on a worldview in which market boundaries and industries can be reconstructed by the actions and beliefs of industry players.

Excerpts from the article “Blue Ocean Strategy” written by W. Chan Kim and Renee Muaborgne.
Location: New Delhi, Delhi, India

Comments

KAVYA's HOTSPOT said…
it seems to be right on spot. most of the companies are adopting the same strategy to create a new market for themselves.

good keep it up.
November 5, 2012 at 4:07 PM
Радомир Эра said…
This comment has been removed by a blog administrator.
January 22, 2020 at 6:24 AM
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