Blue & red ocean startegy

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Blue & red ocean startegy

  1. 1. Blue & Red Ocean Strategy:(a description by Rajat Sharma)Blue Ocean strategy was given by W. Chan Kim and Renée Mauborgne in 2005where they talked about an uncontested market space which can be used tocreate a new demand for high growth and profit.The name "Blue Ocean Strategy"was introduced in the Harvard Business Review article published in October 2004.In contrast, Red Ocean, consists of the known or the existing market space,competitive rules of the game are known and due to cut throat competition theocean turns bloody. The whole idea is that companies try to outperform the rivalsby getting a greater market space and as the market space becomes crowded theprofits get reduced so the Blue Ocean strategy suggests that we should jump intothe uncontested or untried market space where a new demand and opportunitycan be created to get profitable output.Consider this, I went to Tank Road in New Delhiwhere there is a wholesalemarketfor ‘Jeans’. When I stepped into the market there were so many of them sellingtheir clothing and they kept on calling & advertising their product and even hadpaid people to convince and taketo their respective shops. There was cutthroatcompetition on margins.Isn’t this much the same behavior we see in ourindustries? Thus the term, Red Ocean.The Blue Ocean, on the other hand, is calm, smooth, little or no competition. Thisis where everyone would like to be and it is possible for you to have a Blue Ocean.The first example they have quoted in their book is of ‘Cirque du Soleil’ whorevived the circus business by giving their first Cirque productions the title“WeReinvent The Circus”. They created an uncontested market space that appealed toa whole new group of customers including adults and the corporate. They realizedthat the only way to beat the competition is to stop trying to beat thecompetition.One important point to this strategy is ‘Value Innovation’ which entails thealignment of innovation with utility, price and cost positions. Also published aHarvard Review article by Kim and Maurborgne titled ‘Value Innovation’ in1997.They have made a decade long study of 150 strategic moves on more than30 industries to come with astrategy which has become extremely popular andmore industries have come realize the strategy.

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