Premium Essay

Literature Review Blue Ocean Strategy

In: Business and Management

Submitted By MirkoHagendorf
Words 595
Pages 3
LITERATURE REVIEW
BLUE OCEAN STRATEGY
BY W. CHAN KIM AND RENÉE MAUBORGNE

Mirko Hagendorf

AGENDA
I.

Introduction of authors

II.

The Blue Ocean Strategy
Definitions of Red and Blue Oceans
Characteristics
Summary
Success and examples

III. Critical reflection of the strategy
IV. Discussion and questions

2

I.

INTRODUCTION OF AUTHORS

W. Chan Kim & Renée Mauborgne
Work together at INSEAD (Institut Européen d´Administration des Affair, France)
Both as Co‐Director of “INSEAD Blue Ocean Strategy Institute”
Kim: Bruce D. Henderson Chair
Professor of Boston Consulting Group for
Strategy and International Management
Mauborgne: Professor for Strategy
Member of President Barack Obama’s Board of Advisors
Ranked No. 2 in The Thinkers50 listing of the World’s Top Management Gurus

3

II. THE BLUE OCEAN STRATEGY DEFINITION
Red Ocean
“represent all the industries in existence today ‒ the known market space (…) [where] companies try to outperform their rivals in order to grab a greater share of existing demand.”


Roots in military thinking on strategy



“Structuralist view” or “environmental determinism”



Situation in many industries lead to shrunk profit margins

4

II. THE BLUE OCEAN STRATEGY DEFINITION
Blue Ocean
“denote all the industries not in existence today (…) [where] , demand is created rather than fought over.”


“reconstructionist view”



Creation
‐ “give rise to completely new industries”
‐ “created from within a red ocean when a company alters the boundaries of an existing industry”

5

II. THE BLUE OCEAN STRATEGY CHARACTERISTICS
Strategic thinking




Technology innovation not a defining feature
Incumbents create blue oceans within their core business
Blue ocean creation is the result of strategy

Characteristics



Differentiation and low cost…...

Similar Documents

Premium Essay

Blue Ocean Review

...Besides challenging the norm of competing with rivals, Blue Ocean Strategy also challenges several other perceptions of new business strategies. Increase in product value and services do not necessarily require technological advancements. A successful “Blue Ocean Strategy” is seen to rely on existing resources and in many cases, allow companies to cut down on further resources. Finally, Blue Ocean Strategy emphasizes the importance of interpersonal office skills in executing a successful new strategy. Employees are often sidelined during decision making and are generally not treated with the appropriate respect and humanity deserving of employers.. The authors caution the reader that employees and office politics are not only strong determinants of the strategy’s success but can also lead to failure even before the strategy takes off. Although written in simplified English, the book retains a text-book feel because of its technical terminology. The authors provide numerous examples and case studies to ensure the understanding of readers who are not necessarily familiar with managerial terms. Additionally, their multiple illustrations and steps under each principle allow readers to observe and learn the different phases of crafting a strategy. A Must have Tool for the Next Generation of Business Leaders Blue Ocean Strategy has already benefited numerous companies and has received stellar reviews. Its authors have already been listed amongst the top 10 most......

Words: 290 - Pages: 2

Premium Essay

Blue Ocean Strategy

...authors of BLUE OCEAN STRATEGY 1) What is a blue ocean strategy? Kim & Mauborgne: Blue Ocean Strategy is a way to make the competition irrelevant by creating a leap in value for both the company and its customers. 2) What are red and blue oceans, and why do you use the colors red and blue? Kim & Mauborgne: We use the terms red and blue oceans to describe the market universe. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Hence, the term “red” oceans. Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Like the “blue” ocean, it is vast, deep, powerful, in terms of profitable growth, and infinite. 3) How does blue ocean strategy fundamentally differ from red ocean......

Words: 2412 - Pages: 10

Premium Essay

The Blue Ocean Strategy

...Blue Ocean Strategy Paper The Harvard Business Review “Blue Ocean Strategy” by W. Chan Kim and Renee describes the “business universe” and its two “distinct kinds of space,” the red ocean and the blue ocean. The article explains how the market space if divided by these two oceans. The red ocean symbolizes the industries that are currently in present in the market. These industries serve as models for current competitors as well as future ones. On the other side, blue oceans are industries that are “not in existence today.” These industries are unknown and could be developed from red oceans or from completely new industries. The main difference between these two types of markets is the customer demand. Red oceans have fixed demand and competitors constantly compete against each other for consumers’ acceptance and attention. Blue oceans create a demand that did not existed before, generating greater opportunities for growth. Although the concept of red and blue oceans might be new for many, it has existed since the moment industries were created. In summary, red oceans are existing industries and blue oceans are unknown industries. When we look back, we realize that all industries that seem essential for daily tasks were once unknown. Long time ago, the pool of industries that conformed the red ocean was not as immense as it is today. As blue industries were introduced, the red ocean became larger. As of today, the Standard Industrial Classification (SIC) has been...

Words: 322 - Pages: 2

Premium Essay

Blue Ocean Strategy

...strategic strategy known as Blue Ocean Strategy; Blue Ocean was coined by W. Chan Kim and Renee Mauborgne. In this strategy, the authors use the term “blue ocean” to get people to envision creating their own “blue oceans” which is often thought of as untouched and deep. This is the exact opposite of the beliefs of other strategies like Porter, D’Aveni, and Moore who work within the current market to beat the competitors. In the past ten weeks, this class has tested me by having to read challenging articles that presented several different strategic theories to us. While all of the theories brought us interesting and valuable information, the one that resonated most with me and stuck out the most was the Blue Ocean Strategy. I have always been someone who enjoys a challenge and I feel that while this theory is a challenge, it has the most potential to bring organizations the greatest amount of success. To fully understand why I selected this theory opposed to one of the other ones, I feel that first I need to explain exactly what Blue Ocean Strategy is and who has used it and gained enormous amounts of success. While there are many people who believe taking down the competition is the best plan for their company and will result in huge success, Blue Ocean Strategy does not even factor it into their decision making process as a way to reach success. To discuss Blue Ocean Strategy, we also have to understand Red Ocean Strategy. Red oceans are all other strategies that are......

Words: 3869 - Pages: 16

Premium Essay

Blue Ocean Strategy

...TLFeBOOK Blue Ocean Strategy Blue Ocean Strategy How to Create Uncontested Market Space and Make the Competition Irrelevant H A R VA R D B U S I N E S S S C H O O L P R E S S BOSTON, MASSACHUSETTS ( ) ( ) ( ) ( ) ( W. Chan Kim Renée Mauborgne Copyright 2005 Harvard Business School Publishing Corporation All rights reserved Printed in the United States of America 09 08 07 06 05 5 4 3 2 1 No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to permissions@hbsp.harvard.edu, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163. Library of Congress Cataloging-in-Publication Data Kim, W. Chan. Blue ocean strategy: how to create uncontested market space and make the competition irrelevant / W. Chan Kim, Renée Mauborgne. p. cm. Includes bibliographical references and index. ISBN 1-59139-619-0 (hardcover: alk. paper) 1. New products. 2. Market segmentation. I. Mauborgne, Renée. II. Title. HF5415.153.K53 2005 658.8 02—dc22 2004020857 The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Publications and Documents in Libraries and Archives Z39.48–1992 To friendship and to our families, who make our......

Words: 72695 - Pages: 291

Premium Essay

Blue Ocean Strategy

...Blue Ocean Strategy Danny Speed MKT/421 23 June 2014 Stephen Grothe Blue Ocean Strategy There are many different strategies in the market today that assist a company with getting ahead of the competition. Blue and red ocean strategies are important in this regard. A company can utilize the objectives outlined in these strategies to exceed their own expectations, as well as those of their competitors. One way to differentiate between the two strategies is that using blue ocean strategy, the ocean is nice, calm and blue; while, when using red ocean strategy, the ocean is rough and red with the blood from fierce competition. Blue ocean strategy has been around for hundreds of years, even if people didn’t realize it at the time. During the industrial revolution, nearly every product coming out was new and innovative for that period of time. Essentially, every product coming out was following blue ocean strategy. Blue oceans occur when the product being introduced to the market have no direct competition; which, is a much easier way for a new company to enter the market. When entering a red ocean strategy, a new company will have a good amount of trouble competing with already established companies and products. It is very easy for blue oceans to turn red once other companies see the profitability of a certain product and try and join that particular market. The goal in a blue market is for a company to create a product and customer following that will make any...

Words: 803 - Pages: 4

Premium Essay

Blue Ocean Strategy

...Tiffany Betz Blue Ocean Strategy MKT 421 Professor Creig Foster September 22, 2014 Blue Ocean Strategy Blue ocean strategy is about reinventing rather than competing with others in the same industry. “Blue oceans denote all the industries not in existence today- the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over” (Kim, & Mauborgne, 2004). The blue ocean strategy opens opportunities for organizations, reduces competition and creates a part from traditional models. If organizations strived to be different, offer different items and innovative ideas, there would be less bloodshed in the world of corporation competition. One real issue, is that there is an incredible amount of organizations working to create and sell products to consumers. Eventually, the ever growing companies and surplus of supplies will steadily lower the demand. When corporations create similar items to the competition, consumers lose sight of product differences. This is because the competition gets so intense, that the products begin to mirror each other. Since companies are not creating two unique products to choose from, consumers base their decisions on price. These similarities also denote branding and force companies into price slashing, which reduces overall profits and gain. Chinet As I comb the isles of my local grocery store for birthday party supplies, I cannot help but wonder why all of these items are sold......

Words: 776 - Pages: 4

Premium Essay

Blue Ocean Strategy

...Blue Ocean Strategy Shakira Mays MKT\421 Anissa Upshaw July 28, 2014 Blue Ocean Strategy When starting a business, there are several factors that an organization must consider. These factors include the type of product or service they would like to offer, the target market, as well as the price. New organization or organization is trying to recreate themselves also need to think about their competition. Competitors are the driving force for any organization; each company must one up the other in order to win the demand of consumers. When competition is too strong then, organizations must think outside the box and come up with new innovative ideas. There are several strategies that companies can use when making decisions about new products and services; this essay will look at the blue ocean strategy. The essay will describe the blue ocean strategy, its importance, a product that is a blue ocean move, and explanation of the product. The consideration of a red ocean move for the product will be done, as well as the pro and cons of the red ocean strategy. Blue Ocean Strategy Blue ocean strategy is a strategic move that organizations or individuals use to create new product or ideas. The strategy can transform a current product or idea or create something total new. Blue ocean strategy is innovative, and it creates a new market instead of fitting into the current market. By doing this company, does not have to compete because there are no competitors. ......

Words: 812 - Pages: 4

Premium Essay

Blue Ocean Strategy Paper

...Blue Ocean Strategies MKT 421 February 2, 2015 Strategy and Positiong Paper for StressLess: A Fitbit Product What is innovation? By definition, it is a new method, or idea that revolutionizes the current standard. Innovation is paramount to success in a competitive market. A company can choose innovation in the current market, or use a red ocean strategy. This strategy is to take a current product or process and improve upon it. Another option businesses have is to endeavor for a blue ocean strategy: the strategy of creating a new market. A blue ocean strategy takes the market to a new level. A new product, or a new business is invented in a blue ocean strategy. Blue ocean strategies are vital in the business cycle, as the blue ocean represents the new, uncharted territories in business. Without blue ocean strategies, society would never make advance leaps in technology. The world would have received the cotton gin, as it was an improvement on a current tool. But would the world have received the printing press? The computer? The wheel? Currently, society is in a technological upswing. Blue ocean strategy moves were common when technology was evolving into the common, household use that it experiences now. With technology becoming so common, the red ocean strategy has taken over the blue ocean strategy seen previously. Blue ocean strategies are being seen more in societal and cultural convenience rather than mechanical devices. While it is expected that a blue ocean......

Words: 835 - Pages: 4

Premium Essay

Blue Ocean Strategy

...Blue Ocean Strategy MKT 421 Name Date Instructor Blue Ocean Strategy Description and Significance According to Cham Kim and Renee Mauborgne (2004), the Blue Ocean strategy involves the description of how the organization should try and proceed to find some way to work in the marketplace that is not bloodied by the competition and also that is free of competitors. The strategy is against working in conditions such as Red Ocean, where businesses are ferociously fighting each other for some share of the marketplace. In essence, businesses are most often looking for ways that can better contend with their competitors, and that is the Blue Ocean strategy. According to the book Blue Ocean Strategy, the leading companies succeed not by battling with competitors, but by systematically developing “Blue Oceans” of uncontested market space ripe for the growth. Such a strategy of Blue Oceans the simultaneous pursuit of differentiation and also low cost, including the theory behind it not to outperform the competition in the on-hand industry, but to develop new market space or rather the “Blue Ocean”, in which case it makes the competition irrelevant. (Brooks, 2013) As such, the Blue Ocean strategy illustrates the opportunities of vast and untapped market spaces (Kim & Mauborgne, 2004) The Blue Ocean strategy is quite important. This is because it allows some business to sell its products with no or little competition from other firms. It......

Words: 962 - Pages: 4

Premium Essay

Blue Ocean Strategy

...Blue Ocean Strategy Paper In today’s global economy, many companies are competing each and every day for the same customers. On the other hand, the elite companies are sailing in uncontested waters by being innovative and creative in obtaining profit and growth. Research spanning over 100 years in thirty industries was conducted, and the result was astonishing. The conclusion of the research was that companies need to stop competing head-on in existing industry space because they should make competition irrelevant. How do you make competition irrelevant? What product or service can fall in this innovative strategy? What is the alternative to this strategy and what are the pros and cons? First of all, how to make competition irrelevant? Blue Ocean created by W. Chan. Kim and Renee Mauborgn is Strategy based on 100 years long study of more than 150 strategic moves, spanning more than 30 industries. It pursues differential and low cost. Blue ocean strategy is based on the simultaneous pursuit of differentiation and low cost. It creates uncontested market space because it doesn’t aim at competing nor does it aim at outperforming the competition; rather it aims at making the competition irrelevant by reconstructing the industry standards and boundaries. Blue ocean strategy uses tools and framework to break away from the competition. By doing so, it creates new market space. Blue ocean strategy starts by assessing the current state of play in an industry to exploring the new......

Words: 888 - Pages: 4

Free Essay

Blue Ocean Strategy Plan

...Blue Ocean Strategy Plan MKT/421 Introduction In today's competitive market where companies attempt to outperform one another by creating a brand new product or adjusting an existing product in attempts to appeal to a larger customer base are referred to as a Blue and Red Ocean strategy plans; “Red Oceans represent industries in existence today, and the industry boundaries are defined, accepted, and the competitive rules of the game are understood. Blue oceans denote all the industries, not in existence today- the unknown market space untainted by competition." (Kim & Mauborgne, 2004, p. 82(10), 76–84.). Movie theaters are one example of a Red Ocean. Initially, individuals would watch movies at a drive-in movie theater that later progressed to indoor movie theaters where customers were given the opportunity to purchase foods and beverages. In attempts to outperform standard movie theaters, iPic Entertainment, LLC created iPic movie theaters which offers movie goers a luxury movie theater experience by offering a chef-driven menu instead of standard movie theater concession stands, comfortable lounge chairs, blankets, and pillows while watching movies, and a lounge area where customers can purchase mixed drinks and cocktails. (iPic Entertainment, LLC, n.d.). Description of a Blue Ocean Strategy and its Importance The automotive industry is one example of an organization that creates a Blue Ocean strategy plans within its...

Words: 807 - Pages: 4

Premium Essay

Blue Ocean Strategy

...Introduction Blue Ocean strategy describes how organization should try and find a way to work in a marketplace that isn’t full of competition and not full of competitors. It is important to understand the importance of the blue ocean strategy. By being able to understand the importance of the blue ocean strategy, I can then identify a product or service that would be considered a blue ocean move. Since there is an opposite strategy of the blue ocean strategy called a red ocean move, it is important to explore a move for this strategy and analyze pros and con of the red ocean move. What is the Blue Ocean Strategy? The term blue ocean is rather new, although it is a strategy that has been with us as long as selling something for profit has. The blue ocean strategy is to come out with a new industry or service that has no competitors that way there are no factors in the way of success other than making a good product that people are going to want to be. For example, in the late 1800’s and early 1900’s, Karl Benz opened up the industry for automobiles by creating the first modern and gasoline automobile. (Liberty of Congress, 2011) Karl Benz ran the idea of an automobile hoping people would find value in it. No one else was doing anything like this, so Karl Benz pretty much created the industry, thus using the blue ocean strategy. I believe the blue ocean strategy is giving this name because it clear and free of pollutants. In the situation, the pollutants would be other......

Words: 811 - Pages: 4

Premium Essay

Blue Ocean Strategy

...Blue Ocean Strategy Paper The blue ocean strategy in marketing is a business theory that helps search for ways to gain uncontested market space, this is seen as a unique approach to building a customer base. The following essay will analyze the blue ocean strategy and its importance, while providing a product or service that might be considered a blue ocean strategy. Lastly, an alternative red ocean move for the same product or service along with the pros and cons of that strategy will be discussed. Blue Ocean Strategy was developed by W. Chan Kim and Renee Mauborgne. “It describes how companies traditionally work in "red ocean" conditions, where businesses viciously fight against each other for a share of the marketplace. Instead, according to the blue ocean strategy, organizations should find a way to work in a marketplace that is free of competitors.” ("Blue Ocean Strategy", 2015). The purpose of the Blue Ocean strategy is to create an uncontested market place while making the competition irrelevant. By doing so this creates and captures new demands and breaks the value-cost trade off. In result, this aligns the whole system of a business’s activities in pursuit of differentiation and low cost. This strategy is important for businesses because in order to make your competition irrelevant, you must leave the red ocean and go to the blue ocean. Once in the blue ocean, you only need to create demand for your product or service. Examples of Blue Ocean Moves There......

Words: 717 - Pages: 3

Premium Essay

Blue Ocean Strategy

...authors of BLUE OCEAN STRATEGY 1) What is a blue ocean strategy? Kim & Mauborgne: Blue Ocean Strategy is a way to make the competition irrelevant by creating a leap in value for both the company and its customers. 2) What are red and blue oceans, and why do you use the colors red and blue? Kim & Mauborgne: We use the terms red and blue oceans to describe the market universe. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Hence, the term “red” oceans. Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Like the “blue” ocean, it is vast, deep, powerful, in terms of profitable growth, and infinite. 3) How does blue ocean strategy......

Words: 2412 - Pages: 10

Pertinence | 商务合作 | Musica 6