Businesses operate in highly competitive environments, creating the need to strategize and develop a plan that will give an edge over rivals. One such strategy is the blue ocean strategy, which is all about making the competition irrelevant. The strategy is a simultaneous pursuit of differentiation and low cost for businesses to remain relevant in the market. Businesses seeking success in the modern competitive environment implement the strategy by opening up new markets and creating new demand (Blue Ocean Strategy). The process involves the creation and capturing of uncontested spaces in the market, rendering the rivalry irrelevant. Achieving the goal is not always easy and involves considerable innovation and creativity. The strategy is founded on the presumption that market borders and industry structures are flexible and that a company can construct any relevant operations. Industry players use their beliefs and actions to create new boundaries and industry structures.
One of the ways to understand the blue ocean strategy comprehensively is to compare it with the red ocean strategy. The table below shows a comparison of the two strategies:
|Red ocean strategy||Blue ocean strategy|
|1. The business compete in the current market space
2. The business strives to beat the competition
3. The companies takes advantage of the existing demand
4. The firm makes the value-cost trade-off
5. The company aligns its entire system of its activities with its strategic choice of differentiation or low cost
|1. The businesses strives to create uncontested market
2. The company strives to render competition irrelevant
3. The company creates and takes advantage of new demand
4. The firm breaks the value-cost trade-off
5. The business aligns the entire system of its activities to achieve differentiation and low cost.
Additional analysis shows that a blue ocean strategy differs from a red ocean strategy in the market space they operate. The red ocean simply suggests all the industries that exist today. The market spaces are highly competitive, and new and existing companies seek to create means to survive and rival the current competitors. Red oceans have defined and accepted market boundaries and industry structures. Companies already understand the competitive rules of the game and know how to play by them (Blue Ocean Strategy Presentation). Thus, the companies strive to rival their competitors and capture as much space and existing demand as possible. Profits and opportunities for growth decline as the market space become crowded. They are called red oceans because products become commodities at that point of intense rivalry, causing ‘bloody’ competition.
Red oceans differ from blue oceans, which are the market spaces and industries that are n today. They are the unknown market spaces that are devoid of competition. Instead of fighting for a demand like in red oceans, in the blue ocean, companies create demand (Blue Ocean Strategy PowerPoint Templates). They have an opportunity to grow and increase their profits. The rules of the game are not yet set, meaning that competition is irrelevant. They are wide and expansive markets with a potential for exploration. Blue oceans are what many businesses seek to remain profitable and continue growing.
While companies are interested in finding their blue ocean to grow and become profitable, managers should understand that the process is not for the fainthearted. The process takes work to identify the unexplored markets and create strategies to succeed in them. They require considerable analysis to identify the market potential. However, when done, the rewards from such markets are great. Running a business without competition should be a source of motivation for companies that adopt the blue ocean strategy. The company will be at the forefront and pocket a considerably high amount of profits.
The blue ocean strategy is not about dividing the market into two parts. The process is about the efforts by individuals or organizations to create new frontiers of opportunities. It is about creating new market growth and jobs. The focus shifts from fighting for a more significant part of the current market but creating that space solely for the business. According to Denning, there are three components of a successful blue ocean strategy: the mindset, tools, and human-ness. The authors realized that the success of the blue ocean strategy is founded on a shift in mindset. The model involves the expansion of mental horizons and creatively thinking about where the opportunities are. With changes in the frames of mind, a business can identify and explore new opportunities. Tools are necessary to implement a blue ocean strategy successfully. Successful strategy implementation takes practical tools to change the blue ocean idea into a successful business venture. After all, not all ideas can be translated into a business success. Intermittent, one-off “Blue Ocean strategy” is a different thing from a systematically adopted business. In terms of human-ness, successful strategy implementation requires a humanistic move in which people are inspired to confidently own and drive the change.
The implementation of a blue ocean strategy requires managers to follow a five-step process. The steps show how some companies have managed to implement their blue ocean strategies when many are stuck in the highly competitive red oceans.
The first step is selecting the right place to begin and creating the right team to support its implementation. The right team plays a key role in creating the right structures and tools for the implementation.
The second step is having a clear picture of the current state of affairs. To understand where the business plans to go, it is essential to understand the current state.
The third step is uncovering the concealed pain points limiting the prevailing industry size and unveiling the ocean of untapped customers. The knowledge will help the company to create and take advantage of the new demand.
The fourth step is systematically reconstructing market boundaries. When the boundaries are limitless, it becomes possible for companies to develop alternative opportunities for growth and profitability.
The fifth step is choosing the correct move when exploring the blue ocean. The manager should conduct rapid market tests, finalize, and launch the change. The business should be prepared for the change and its implementation.
The final step is developing the capacity to move from operating in the current market (the red ocean). Companies that succeed in the blue ocean should not be “settlers” but be prepared for more remarkable value improvement. They should also be prepared to create new value for consumers through market innovation.
In conclusion, a blue ocean strategy is a shift away from the current highly competitive market to explore new and untapped markets. In such markets, the opportunities are unlimited. Companies in the blue ocean have unlimited opportunities for growth and profitability.
Blue Ocean Strategy PowerPoint Templates, 2018. Available October 13, 2021 at: https://24slides.com/presentbetter/blue-ocean-strategy-powerpoint-templates/
Denning, Steve. Moving to blue ocean strategy: A five-step process to make the shift, 2017. Available October 13, 2021 at: https://www.forbes.com/sites/stevedenning/2017/09/24/moving-to-blue-ocean-strategy-a-five-step-process-to-make-the-shift/?sh=68b226487f11
Blue Ocean Strategy Presentation. Available October 13, 2021 at: https://www.blueoceanstrategy.com/presentation/
Blue Ocean Strategy, 2016. Available October 13, 2021 at: Retrieved from https://www.slideshare.net/saocreba201222/blue-ocean-strategy-69644741