need to strategically fight against tough competition.competing for customers in existing markets.The term Red Ocean comes from the idea that the ferocity of the competition leads to bloody battles over profits…in other words like sharks fighting over a carcass. The characteristics of Red Oceans are that they are crowded, lack the potential growth, margins are constantly eroded resulting in commoditization. According to the authors they all share the same characteristics and fate. As an example, all the existing companies that are in a known market space such as chocolate manufacturers. Red Oceans represent all the industries and markets in existence today. If a company is under siege with its market being infested with more and more competitors, then the blue ocean strategy can provide the impetus to change direction. The Blue Ocean Strategy is a useful framework for leadership teams and can facilitate ideas and development of new initiatives.
Whereas, the conventional business strategy focuses on competing inside an existing “red oceans” and trying to beat the competition. The main concept is that profits and growth come from creating new products and services in uncontested markets – the “blue oceans”. In comparison, the new markets or industries accounted for 61% of the profits. What was more astonishing though was that although the line extensions accounted for 62% of total revenues, they only delivered only 39% of total profits. They analyzed new business launches in 108 companies and found that 86% of these new ventures were merely line extensions and only 14% actually created new markets or industries. Chan Kim and Renee Mauborgne studied 150 strategic moves across 30 industries across 100 years. The appeal of this message propelled the book into the bestseller list and it has subsequently sold over 4 million copies and be translated into over 40 languages.
Chan Kim and Renee Mauborgne in their book Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. The term ‘Blue Ocean’ comes from the now famous book by professors W. Blue Ocean Strategy Definition and Fundamentals In other words, the key to success is to find a market that you can create and then make your own. These combined strategies effectively beat the competition or in their own words “ make the competition irrelevant“. Markets or “blue oceans” are created by value innovation and at the same time driving down costs. A Blue Ocean Strategy focuses on creating and exploiting new market spaces – ‘blue oceans’, rather than going head to head in fiercely competitive markets, red oceans. What are some examples: Cirque De Soleil, Nintendo Wii, National Youth Orchestra of Iraq, Nescafe Nespressoīlue Ocean Strategy is a concept developed by INSEAD professors W.