What are the pros and cons of blue ocean strategy?
Blue ocean scheme makes the competition irrelevant by making a new market infinite where there is no competitions. There are many pros and cons of this strategy- the chief and considerable advantage of this scheme is the first mover benefit in footings of market incursion where the companies see no competition and hence these companies become the male monarch of the market.
Why is it called 'blue' ocean strategy?
Why is it called blue ocean strategy? A blue ocean is an analogy to describe the wider, deeper potential to be found in unexplored market space. A blue ocean is vast, deep, and powerful in terms of profitable growth.
Is blue ocean strategy basically a low cost strategy?
Chan Kim & Renée Mauborgne: Blue ocean strategy is about pursuing both differentiation and low cost. Under traditional competitive strategy differentiation is achieved by providing premium value at a higher cost to the company and at a higher price for customers. Think about Mercedes Benz.
What is the mindset of blue ocean strategist?
The Blue Ocean Strategy is a strategic framework, mindset and method that you can use to create new markets where there is no competition. In this article, I’ll take you what is a blue ocean strategy? the fundamentals of a blue ocean strategy and how to use the blue ocean strategy to identify exploit new market opportunities.
Is Blue Ocean Strategy still viable?
Speaking of all type of set ups, Blue Ocean Strategy is still successful because it is scalable. Any type of organization either it profitable or non profit can use the tools, methodology and framework.
Why Blue Ocean Strategy is the best?
The blue ocean strategy encourages tweaking your products to push them into their own market with low prices and no competition. Many household-name businesses have reached their current stature through blue ocean strategies, but the approach can be risky.
Why do many firms fail to successfully implement a Blue Ocean Strategy?
Why do many firms fail to successfully implement a blue ocean strategy? Because they end up being "stuck in the middle," unable to increase value and lower costs at the same time.
What outcomes does Blue Ocean Strategy produce?
Blue ocean strategy creates new demand. Companies develop uncontested market space rather than fight over a shrinking profit pool.
Did Netflix use blue ocean strategy?
A blue ocean business is about new market space, new clients, and new product features, and there are many factors that make this a high-risk strategy. Those who succeed, however, are rewarded. One company that has benefited greatly from its brave blue ocean decisions is Netflix.
Is Tesla a blue ocean strategy?
Tesla Motors is a great example of a blue ocean company. In 2003, they decided to innovate into an areas where there was no competition. Other car makers at the time were making “compliant” cars, meaning the were making hybrid cars to show they were meeting the government's mandates to be working on “green” technology.
What is are the main weaknesses of the blue ocean strategy?
Disadvantages of Blue Ocean Strategy There is a possibility that the customer might not understand what the business is trying to sell and how beneficial the product might be. The technology and the customer preferences might not be developed up to the extent where the business can create a profit.
Which company has used blue ocean strategy?
The first example of blue ocean strategy comes from computer games giant, Nintendo, in the form of the Nintendo Wii. The Nintendo Wii launched in 2006 and at its heart is the concept of value innovation. This is a key principle of blue ocean strategy which sees low cost and differentiation being pursued simultaneously.
What companies have used the blue ocean strategy?
Ford and Apple are two examples of leading companies that created their blue oceans by pursuing high product differentiation at a relatively low cost, which also raised the barriers for competition. They also were paradigmatic of burgeoning industries at the time that were later exemplified and emulated by others.
Why is blue ocean strategy hard?
1:382:20The Explainer: Blue Ocean Strategy - YouTubeYouTubeStart of suggested clipEnd of suggested clipBecause they are hard for rivals to realize blue ocean potential like cirque did companies shouldMoreBecause they are hard for rivals to realize blue ocean potential like cirque did companies should chart a strategic course past traditional industry boundaries to create a new market.
Is Starbucks a blue ocean strategy?
Starbucks is an excellent example of a company that has successfully implemented the Blue Ocean Strategy. Many cafes were already established when Starbucks was launched. Instead of focusing on their coffee, they have developed the Starbucks brand as different, a strategy still unexplored in this sector.
What is the impact of using blue ocean strategy on business performance?
Blue Ocean Strategy allows businesses to create a Niche market to get out of the red ocean competition so that competition becomes irrelevant. The study found that Blue Ocean Strategy and Niche marketing had a significant positive effect on business entrepreneurship.
Which of the following best describes the blue ocean strategy?
Which of the following best describes the blue ocean strategy? A firm using a blue ocean strategy tries to make the competition irrelevant.
What is the impact of using blue ocean strategy on business performance?
Blue Ocean Strategy allows businesses to create a Niche market to get out of the red ocean competition so that competition becomes irrelevant. The study found that Blue Ocean Strategy and Niche marketing had a significant positive effect on business entrepreneurship.
What is the cornerstone of blue ocean strategy?
Value innovation is the cornerstone of blue-ocean strategy. We call it value innovation because instead of focusing on beating the competition in existing market space, you focus on getting out of existing market boundaries by creating a leap in value for buyers and your company which leaves the competition behind.
What made Cirque du Soleil's strategy successful How would you describe this business compared to the traditional circus?
Instead it created uncontested market space that made the competition irrelevant. It appealed to a whole new group of customers: adults and corporate clients prepared to pay a price several times as great as traditional circuses for an unprecedented entertainment experience.
What is the Blue Ocean approach?
The competition is irrelevant. Taking a Blue Ocean approach means your goal isn’t to outperform the competition or be the best in the industry. Instead, your aim is to redraw industry boundaries and operate within that new space, making the competition immaterial.
What is backroads travel?
Backroads: This company turned travel into something more challenging and engaging than the typical relaxing itinerary of an all-inclusive cruise or beach vacation. Backroads expanded the industry to offer something novel: luxury active travel. These meticulously designed, fitness-based trips include guides who take guests hiking, biking, camping, and more. Backroads’ Blue Ocean Strategy appealed to a much different audience than vacationers looking to relax, and has played a major role in expanding the industry to include travelers who want to feel fulfilled and accomplished at the conclusion of a trip.
What is the Blue Ocean Idea Index?
You have a framework to test ideas. The Blue Ocean Idea Index is part of the overarching strategy and lets companies test the commercial viability of ideas. This process helps refine ideas and identify opportunities with the most potential, minimizing risk.
What is the goal of a blue ocean strategy?
The goal of a Blue Ocean Strategy is for organizations to find and develop “blue oceans” (uncontested, growing markets) and avoid “red oceans” (overdeveloped, saturated markets). A company will have more success, fewer risks, and increased profits in a blue ocean market.
Is Cirque du Soleil a circus?
While kids are still part of the target audience, the much higher ticket price guaranteed the primary customers would be adults. Cirque du Soleil did not attempt to be another circus with clowns and performing animals —its Blue Ocean Strategy completely reinvented the market.
Is the Blue Ocean Strategy a pacifist?
Of the many strategic planning models that exist, the Blue Ocean Strategy could be considered the pacifist of the group.
Can differentiation and low cost coexist?
Differentiation and low cost can coexist. The Blue Ocean Strategy argues that consumers don’t have to choose between value and affordability. If a company can identify what consumers currently value and then rethink how to provide that value, differentiation and low cost can both be achieved. This is termed “value innovation.”
What was the Red Ocean battle between Nintendo and Nintendo?
The two major suppliers defined themselves primarily through the performance of their consoles and were involved in a red ocean battle for the best graphics and computing performance. Nintendo decided to try something new with the Wii and appeal to consumers who were not really into video games.
How does the Wii controller work?
By simply moving the controller, you can move the figures on the screen: the entry level is therefore very low for people who have not previously used game consoles. In addition, the Wii forgoes many of the features that define the competition, so the cost of the device has been kept low.
How long does Blue Ocean Strategy last?
In a study conducted by Mauborgne and Kim in the run-up to their book, however, they found that companies with a Blue Ocean Strategy were able to maintain their dominance in the new market for an average of 10 to 15 years.
What is the Blue Ocean strategy?
The idea behind the Blue Ocean Strategy: Successful companies do not orient themselves to the competition, but go their own way. In order to open up a market that no one else is working on, you have to create a completely new one. For this you need one thing above all else: innovations.
When was Cirque du Soleil founded?
The Canadian entertainment company Cirque du Soleil was founded back in the 1980s, and found a way out of the sinking red ocean of the circus industry. The numerous market participants fought for an ever-smaller customer group. Certain features, which had been the hallmarks of a successful circus decades earlier, were no longer up to date, and more and more spectators were stopping visiting the classic circus tents. Above all, animal cruelty deterred visitors. Cirque du Soleil therefore removed animal attractions from its portfolio. Instead, the range was extended to include highlights from other entertainment areas - above all dance and live music.
Why are blue oceans blood red?
The latter refer to highly competitive markets that are - figuratively speaking - blood-red in color due to predators attacking. The blue oceans, on the other hand, are untouched and completely free of competitors.
What does "create" mean in business?
Create: Develop new factors that are not yet known in the industry to create a new product.
What was Peirce College?
In an entirely different arena, consider the story of Peirce College. Founded in Philadelphia in 1865, Peirce provided technical and business training to returning Civil War veterans. But by 1990, its growth had floundered. In 1991, college president Arthur J. Lendo employed Blue Ocean style strategic thinking. He sought uncontested marketing areas that aligned with unmet needs. In this case, it meant tapping into working adults seeking education. In doing so, they shifted focus to associate degree programs and online learning.
What is the Red Ocean strategy?
Red Ocean Strategy, in contrast, serves as the antithesis of Blue Ocean Strategy. And it is how most businesses compete. A Red Ocean approach means carving out existing market space among rivals. So you compete to get a bigger slice of that pie. But why not bake a new pie?
Why are some competitors leaving market spaces untapped?
For instance, some competitors may have left market spaces untapped for a reason. That is, they are simply not profitable or in low demand. And in other cases, the timing simply is not right. Your brilliant idea may be too ahead of its time. The first to pave the way for others does not necessarily reach their goal. The market space may be murky, or your product differentiation unclear. And people are often resistant to change. Explaining a new product or service to them will likely require ninja-level marketing skills.
What is the change required innovation?
The change required innovation. That is, they needed to shift from attempting to out-compete others in existing spaces. By transitioning to largely uncontested markets, they met demand not currently met by competitors.
Who is Bryan Lindenberger?
He served as the first communications specialist for the Arrowhead Entrepreneurial Institute at the New Mexico State University business college with SBA funding. He has since worked in marketing, communications, and development for science, engineering, and business projects. His clients have included NASA, Disney, state education institutions, and multiple corporations and nonprofits. A former PC gamer, Bryan enjoys hiking, amateur photography, and delving into history books.
What are Red Oceans and Blue Oceans?from blueoceanstrategy.com
In their classic book, Blue Ocean Strategy, Chan Kim & Renée Mauborgne coined the terms ’red ocean’ and ‘blue ocean’ to describe the market universe.
What was Peirce College?from success.com
In an entirely different arena, consider the story of Peirce College. Founded in Philadelphia in 1865, Peirce provided technical and business training to returning Civil War veterans. But by 1990, its growth had floundered. In 1991, college president Arthur J. Lendo employed Blue Ocean style strategic thinking. He sought uncontested marketing areas that aligned with unmet needs. In this case, it meant tapping into working adults seeking education. In doing so, they shifted focus to associate degree programs and online learning.
What is backroads travel?from clearpointstrategy.com
Backroads: This company turned travel into something more challenging and engaging than the typical relaxing itinerary of an all-inclusive cruise or beach vacation. Backroads expanded the industry to offer something novel: luxury active travel. These meticulously designed, fitness-based trips include guides who take guests hiking, biking, camping, and more. Backroads’ Blue Ocean Strategy appealed to a much different audience than vacationers looking to relax, and has played a major role in expanding the industry to include travelers who want to feel fulfilled and accomplished at the conclusion of a trip.
What is the Blue Ocean Idea Index?from clearpointstrategy.com
You have a framework to test ideas. The Blue Ocean Idea Index is part of the overarching strategy and lets companies test the commercial viability of ideas. This process helps refine ideas and identify opportunities with the most potential, minimizing risk.
Why is competition irrelevant in the blue ocean?from blueoceanstrategy.com
In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. A blue ocean is an analogy to describe the wider, deeper potential to be found in unexplored market space. A blue ocean is vast, deep, and powerful in terms of profitable growth.
What is the Blue Ocean strategy?from blueoceanstrategy.com
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.
Why are some competitors leaving market spaces untapped?from success.com
For instance, some competitors may have left market spaces untapped for a reason. That is, they are simply not profitable or in low demand. And in other cases, the timing simply is not right. Your brilliant idea may be too ahead of its time. The first to pave the way for others does not necessarily reach their goal. The market space may be murky, or your product differentiation unclear. And people are often resistant to change. Explaining a new product or service to them will likely require ninja-level marketing skills.
What exactly is a Blue Ocean Strategy?
Blue Ocean Strategy is all about devising and acquiring the uncontested market forum by spawning a new demand. Since the industries are in a state of non-existence, there is absolutely no relevance of peer comparison. The strategy bags the new demand by familiarizing unique products with advanced features that stand apart from the crowd.
How does the Red Ocean strategy work?
In order to keep themselves afloat in the marketplace, proponents of the Red Ocean Strategy concentrate on creating competitive advantages by examining the blueprints of their peers/competitors.
Why are blue ocean prices steeper?
The price tags of the products are generally kept on the steeper side because of their monopoly. Blue Ocean’s approach shuns the ideology of outperforming the competition and asserts to recreate the market boundaries and operate within the nascent space.
How did Uber create its market?
Uber devised a new market by the amalgamation of advanced technology and modern devices. It tried to differentiate itself from the regular cab companies and in turn developed a low-cost business model that offers flexible payments, pricing strategies and generates good revenues for both the drivers and the company.
What is Uber app?
It also permits users to trace a driver’s progression towards the pickup point in real-time through the medium of a smartphone application called the Uber App.
What is a startup point?
It includes points that must be blossomed by industry in reference to the line of products, price tags and caliber of services. A startup must analyze the pros and cons of the existing organizations and their strategies for key aspects of differentiation.
What is blue ocean analysis?
A Blue Ocean Analogy is utilized to unlock the wider, unfathomable, powerful and vast potential in the unexplored market space in terms of profitable growth.
What did the circus realize?
The circus realized that people did not want to go to the circus any more. Everybody had become more aware of animal abuse, especially within the circus industry.
How long does a blue ocean strategy last?
A Blue Ocean Strategy, if you carry it out successfully, can create brand equity that lasts for decades.
What is blue ocean strategy?
Definition and examples. Blue Ocean Strategy is a marketing theory in which a business enters a market that has little or no competition. The strategy focuses on moving away from an existing market and seaching for new markets.
How many ways can we create a blue ocean strategy?
There are two ways we can create a Blue Ocean Strategy.
What is the second way to expand an industry?
The second way is for a company to transition or try to expand out of an existing industry. In other words, it tries to expand from a red ocean to a blue one.
What is competitive advantage?
When a company has a ‘ competitive advantage ,’ it has an edge over its rivals. It has something that consumers like, but its rivals do not have.
Who is the professor of Wobi?
In this WOBI video, Prof. Renée Mauborgne tells us how to create uncontested market space, thus making the competition irrelevant.
What is reduced in business?
Reduce: This questions which areas of a company’s product or service are not entirely necessary but play a significant role in your industry, for example, the cost of manufacturing a certain material for a product could be reduced. Therefore, it can be reduced without completely eliminating it.
What is the blue ocean metaphor?
The blue ocean/red ocean analogy is a powerful and memorable metaphor, which is responsible for its popularity . This metaphor can be powerful enough to stimulate people to action. The concepts behind the Blue Ocean Strategy (such as the competing factors, the consumer cycle, non-customers, etc.) are not new, however.
What is blue ocean?
Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. The cornerstone of blue ocean strategy is "value innovation", a concept originally outlined in Kim & Mauborgne's 1997 article "Value Innovation - The Strategic Logic of High Growth".
What is the metaphor of the red and blue oceans?
The metaphor of red and blue oceans describes the market universe. Red oceans represent all the industries in existence today – the known market space.
How many copies of Blue Ocean Strategy have been sold?
Since Blue Ocean Strategy was published in 2005 it has been translated into 43 languages and has sold over 3.5 million copies. The book was named a bestseller by the Wall Street Journal, BusinessWeek, and Amazon.com. It was selected as one of the “Best Books of 2005” by Fast Company magazine, won “The Best Business Book of 2005” Prize at the Frankfurt Book Fair, and achieved bestselling book of the decade status by 800-CEO-READ (2000-2010). Strategy+Business magazine selected it as #1 strategy book of 2005.
What is the purpose of creating a new product?
Create: This prompts companies to be innovative with their products. By creating an entirely new product or service, a company can create their own market through differentiation from the competition.
When was Blue Ocean Strategy developed?
The concept was initially developed in the 1990s when W. Chan Kim was taking part in a consulting project for Philips, headed by the management scholar C.K. Prahalad. Working with consultants from the Mac Group (a consulting company that was later bought by Capgemini ), he developed strategy tools leading to the publication of a series of articles in the Harvard Business Review, and then in 2005 of the Blue Ocean Strategy book.
