Red Ocean Vs Ocean Strategy

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Red Ocean Vs Ocean Strategy

The term red and blue ocean strategy was first coined by W. Chan Kim and Renee Mauborgne in 2005. Red oceans are all the industries existing today where industry boundaries are defined and companies compete for a greater share of the existing market. If the ocean gets bloody red due to cut-throat competition, prospects for profits and growth reduce.

Blue ocean strategy is a new way of thinking, a new strategic mindset, and a bold, new path to winning the future. It is grounded in analysis and energizes everyone. It is about creating new markets instead of competing in the existing ones.

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Blue oceans indicate all the industries not in existence today where the markets are unexplored and untainted by competition. The Blue Ocean companies follow a different strategic logic called value innovation.

Blue Ocean’s strategy is based on a decade-long study of more than 150 strategic moves in more than 30 industries over 100 years. It is based on the simultaneous pursuit of differentiation and low cost. Hence, it is an “and- and” strategy, not an “either-or” strategy. It does not aim to outperform the competition but rather aims to make the competition irrelevant. It does so by reconstructing industry boundaries.

Blue Ocean creating businesses follows a different strategic logic. They are:

  • Challenge industry conditions and paradigms
  • Focus on customers, not competitors
  • Don’t segment customers, aggregate them
  • Assets capabilities are not fixed, they are fluid
  • Solve problems across the entire supply chain

Difference Between Red Ocean and Ocean Strategy

Alignment of organizational systemRed Ocean StrategyBlue Ocean Strategy
CompetitionCompete in existing market space.Create uncontested market space.
AimBeat the Competition.Make the Competition.
DemandExploit existing demand.Create and capture new demand.
Trade-offMake the value-cost-trade-off.Break the value-cost-trade-off.
Alingment of organizational systemAlign the whole system of a firm’s activities with its strategic choice of differentiation or low cost.Alignment of organizational system

FAQ’s

What is Blue Ocean?

It Indicates all the industries not in existence today where the markets are unexplored and untainted by competition.

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