What is blue ocean strategy?

SUMMARY OF BLUE OCEAN STRATEGY BLUE OCEAN STRATEGY: How to Create Uncontested Market Space and Make the Competition Irrelevant W. Chan Kim and Renée Mauborgne Harvard Business School Press, 2005 BLUE OCEAN STRATEGY provides a systematic approach to making the competition irrelevant. In this frame-changing book, Kim and Mauborgne present a proven analytical framework and the tools for successfully creating and capturing blue oceans. Examining a wide range of strategic moves across a host of industries, BLUE OCEAN STRATEGY highlights the six principles that every company can use to successfully formulate and execute blue ocean strategies. The six principles show how to reconstruct market boundaries, focus on the big picture, reach beyond existing demand, get the strategic sequence right, overcome organizational hurdles, and build execution into strategy.

In their their article titled "Blue Ocean Strategy" in the Oct '04 issue of the Harvard Business Review, Chan Kim and Renee Mauborgne proposed that the business universe can be thought of consisting of two distinct kinds of space, and named these spaces as red and blue oceans. Red oceans represent all the industries in existence today-the known market space. In red oceans, industry boundaries are drawn and accepted, and the competitive rules of the game are well understood. Here, companies try to outperform their rivals in order to grab a greater share of existing demand and the space gets more and more crowded, causing the prospects for profits and growth to be reduced. Products would turn into commodities in such a scenario, and increasing competition turns the water bloody. 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. In a few cases, companies can give rise to completely new industries, and the authors have quoted eBay as an example, where it has creaed an online auction industry. In most cases, a blue ocean is created from within a red ocean when a company alters the boundaries of an existing industry. The authors quote the example of Cirque du Soliel, originally a Canada based group of street performers, which fused the boundary traditionally separating circus and theater, creating a new and profitable blue ocean. The circus industry traditionally has been plagued by protests against the treatment of animals by animal rights groups, and falling attendances due to competition from other modes of entertainment. By "reinventing the circus", this Cirque du Soliel, created an uncontested market space that made the competition irrelevant. Cirque stripped away some of the traditional circus offerings and injected new elements drawn from the world of theater. For instance, unlike traditional circuses featuring a series of unrelated acts, each Cirque creation resembles a theater performance in that it has a theme and story line. Thus, through this "Blue Ocean Strategy", Cirque could pull in a whole new group of customers who were traditionally noncustomers of the industry such as adults and corporate clients who had turned to theater, opera, or ballet and were, therefore, prepared to pay several times more than the price of a conventional circus ticket for an unprecedented entertainment experience.

In their their article titled "Blue Ocean Strategy" in the Oct '04 issue of the Harvard Business Review, Chan Kim and Renee Mauborgne proposed that the business universe can be thought of consisting of two distinct kinds of space, and named these spaces as red and blue oceans. Red oceans represent all the industries in existence today-the known market space. In red oceans, industry boundaries are drawn and accepted, and the competitive rules of the game are well understood. Here, companies try to outperform their rivals in order to grab a greater share of existing demand and the space gets more and more crowded, causing the prospects for profits and growth to be reduced. Products would turn into commodities in such a scenario, and increasing competition turns the water bloody. 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. In a few cases, companies can give rise to completely new industries, and the authors have quoted eBay as an example, where it has creaed an online auction industry. In most cases, a blue ocean is created from within a red ocean when a company alters the boundaries of an existing industry. The authors quote the example of Cirque du Soliel, originally a Canada based group of street performers, which fused the boundary traditionally separating circus and theater, creating a new and profitable blue ocean. The circus industry traditionally has been plagued by protests against the treatment of animals by animal rights groups, and falling attendances due to competition from other modes of entertainment. By "reinventing the circus", this Cirque du Soliel, created an uncontested market space that made the competition irrelevant. Cirque stripped away some of the traditional circus offerings and injected new elements drawn from the world of theater. For instance, unlike traditional circuses featuring a series of unrelated acts, each Cirque creation resembles a theater performance in that it has a theme and story line. Thus, through this "Blue Ocean Strategy", Cirque could pull in a whole new group of customers who were traditionally noncustomers of the industry such as adults and corporate clients who had turned to theater, opera, or ballet and were, therefore, prepared to pay several times more than the price of a conventional circus ticket for an unprecedented entertainment experience.