Red and Blue Ocean Strategy

Source: http://www.valuebasedmanagement.net/methods_kim_blue_ocean_strategy.html

According to Kim and Mauborgne, competing in overcrowded industries is no way to sustain high performance. The real opportunity is to create blue oceans of uncontested market space.

 

Of course competition matters. But by focusing on competition and “competitive advantage“, according to Kim and Mauborgne, scholars, companies, and consultants have ignored two very important – and far more lucrative – aspects of strategy:

– One is to find and develop blue oceans, and

– The other is to exploit and protect blue oceans. These challenges are very different from those to which strategists have devoted most of their attention.
In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.

 

There are two ways to create blue oceans:

– One is to launch completely new industries, as eBay did with online auctions.

– It is more common for a blue ocean to be created from within a red ocean when a company expands the boundaries of an existing industry.

 

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