Whereas conventional strategic approaches drive companies to define their industry similarly and focus on being the best within it, blue ocean strategy prompts them to break out of the accepted. A company will have more success, fewer risks, and increased profits in a blue ocean market. First, the theory is explained with a reallife example. In this article you will learn how to make your competition irrelevant and have sales and profit growth in excess of anything you thought was even possible. Closing the gap between blue ocean strategy and execution, hbr april 2015 5. By the end of 2004, curves is expected to reach eight. Manganelli, gm and svp, adidas with energy, enthusiasm and a deep. Created in 1984 by a group of street performers, cirque productions have been seen by almost 40 million people in 90 cities around the world. Red oceans are described as all the industries in existence today. Thus, at the heart of this replica is the untapped market i. Instead of dividing up existingand often shrinkingdemand and benchmarking competitors, blue ocean strategy is about growing demand and breaking.
Blue ocean strategy is based on time and again proven data rather than unproven theories. Heres a brief overview of some of the tools and frameworks used in the formulation and execution of the blue ocean strategy. Pdf the role of a blue ocean strategy on performance. Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand.
Location independent manufacturing casebased blue ocean. They assert that these strategic moves create a leap in value for the company, its buyers, and its employees while unlocking new demand and making the competition irrelevant. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. But in most cases, a blue ocean is created from within a red ocean when a company. We believe that an understanding of blue ocean strategy will help todays companies as they struggle to thrive in an accelerating and.
Of the many strategic planning models that exist, the blue ocean strategy could be considered the pacifist of the group. Blue ocean strategy doesnt aim to outperform the competition. May 12, 2020 blue ocean strategy enables a fundamental transformation in mindset. This blog article is a overview of some of the key points of the book by w.
The most appropriate unit of analysis is the strategic move, the set of managerial actions and decisions involved in making a major marketcreating business offering. The book the origin of the terms red and blue oceans comes from blue ocean strategy how to create uncontested market space and make the competition irrelevant. Gm, the japanese automakers, and chrysler were established play. Examples include fords 1908 model t, gms 1924 car for every purse and purpose.
Chan kim and renee mauborgne, professors at insead, back in 2004. Chain kim in their book dubbed blue ocean strategy. This paper suggests using blue ocean strategy bos to instigate the implementation of sustainability initiatives guided by the similarity between bos and sustainability in terms of their drive for innovation and value. Pdf blue ocean strategy and sustainability for strategic. Blue ocean strategy ends with ten cognitive traps that can deter you from creating blue oceans or that jeopardize your execution. Aim of this dissertation is to investigate whether eataly, the largest wine and food marketplace of the world, entered a blue ocean via business model innovation. After having dealt with the blue ocean metaphor as well as having clarified the concept of value innovation, the chapter moves on by describing the basic analytical tools and frameworks that characterize the blue ocean strategy. Rather than competing within the confines of the existing industry or trying to steal customers from rivals bloody or red ocean strategy in the hbr of october 2004 w. Blue ocean strategy and blue ocean shift kim and mauborgne have been researching what it takes to break out of the red ocean of competition and generate strong profitable growth for over 30 years. General motors created a blue ocean in 1924 by designing car with. This approach has recently gained popularity among the managerial audience thanks to kim and mauborgnes 2004 work on socalled blue ocean strategy the fast second approach. Blue ocean strategy is based on over decadelong study of more than 150 strategic moves spanning more than 30 industries over 100 years.
Blue ocean strategy kim and mauborgne 2004, 2005s blue ocean strategy framework may be used as a source of opportunities. The strategy was developed as one that would ensure businesses were in a position where they could compete favorably in a particular realm by reducing the overall competition. Based on an eponymously titled book, this strategy argues that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Pdf on apr 30, 2016, piotr kuras published the basic assumptions of blue ocean strategy find, read and cite all the research you need on. According to kim and mauborgne, competing in overcrowded industries is no way to sustain. May 31, 2016 this strategy needs to span across the entire system of a companys activities. It is about creating and capturing uncontested market space, thereby making the competition irrelevant. A landmark work that upends traditional thinking about strategy, this bestselling business book charts a bold new path to winning the future. There is ample opportunity for growth that is both profitable and rapid. Do you have a blue ocean strategy in your hospitality. Porters generic strategies, and hax and wildes delta modelin order to find the. Branding in the age of social media, hbr march 2016 8. Achieved via the delivery of features that have a highest marginal benefit to customer needs. Blue ocean strategy is a customerled strategy focusing on existing customers.
Well what then is the impact of this blue ocean on the vacation ownership. The blue ocean strategy will be clearcut and easy to communicate meaning it will be able to be described in a tagline that is compelling and. A third tool, the eliminatereduceraisecreate grid, pushes firms to act on all four questions posed by the four actions framework and to create a new value curve. In less than 20 years, cirque du soleil has achieved revenue levels that took ringling. Blue ocean strategy competing in overcrowded industries is no way to sustain high performance. Value innovation strategy competes in an uncontested market space. The strategy is one of the 5 strategies which you can use in your step 5 of. Download file pdf the blue ocean strategy in insurance industry case study. This is done by introducing the bos and sustainability conceptual framework, which strategic managers can use as a guiding principle in the development of the organizations. How to create uncontested market space and make competition irrelevant.
Blue ocean strategy is based on a decade long study of more than 150 strategic moves spanning more than 30 industries over 100 years. Blue ocean strategy and new business models in the food. It is based on practical approaches that have proven results during live market executions. In contrast, blue ocean strategy creates new demand within red ocean market. They uncovered a systematic process of achieving growth that works whether you are a cashstrapped startup, nonprofit, small business, or a large. Blue ocean structure and price, blue ocean strategy is strategies, by contrast, are based on a world achieved only when the whole system of a view in which market boundaries and indus companys utility, price, and cost activities is tries can be reconstructed by the actions and properly aligned. The blue ocean strategy bos, developed by kim and mauborgne in 2003 was fashioned on the evaluation of the strategic moves of organizations over the past century which have created a leap in.
Netjets aviation industry case study blue ocean strategy. Mar 20, 2020 to illustrate how blue ocean strategy can be used in a variety of industries, well cover three very different industries automobiles, computers, and movie theaters. What is blue ocean strategy about blue ocean strategy. The blue ocean strategy will diverge from that used by other industryplayersbecauseyourelookingacrossalternatives rather than solely attempting to be better than the established players. Chan kim and renee mauborgne suggest blue ocean strategy. The blue ocean strategy is best illustrated by the performance of cirque du soleil. Accordingly, this essay examines the blue ocean strategy concept in the following order. In the 1890s, the horse and buggy was the primary mode of transportation.
In this article you will learn how to make your competition irrelevant and have sales and profit. Majority of research work by kim and mauborgne 2004 has been discussed, presented, and implemented on blue ocean strategy i. Kim and mauborgne document how various companies successfully created blue oceans of uncontested market space. In order to find an innovation the first four steps of the blue ocean strategy were followed. By the end of 2004, yellow tails moving average annual sales were. Blue ocean strategy how to create uncontested market space.
Chan kim and renee mauborgne focused on discovering the common factors that lead to the creation of blue oceans and the key differences that separate those winners from the mere survivors and those adrift in the red ocean. Blue ocean strategy hbr bestseller harvard business. Blue ocean strategy concept was introduced 2005 by kim w. Blue ocean strategy is a book published in 2004 written by w. The blue ocean strategy gave a competitive advantage to the srikandi organizer by innovating in arranging.
The basic principles of strategy havent changed in 30 years, hbr april 2015 4. Gm created a blue ocean in 1924 by injecting fun and. Jan 01, 2017 this kind of strategy has been developed, and it is called blue ocean strategy. Blue ocean strategy how to create uncontested market. Blue ocean strategy is one of the most influential business ideas of our time. Industries ranged from hotels, cinema, retail, airlines, energy, computers, broadcasting, and construction to automobiles and steel. The goal of a blue ocean strategy is for organizations to find and develop blue oceans uncontested, growing markets and avoid red oceans overdeveloped, saturated markets. So powerful is blue ocean strategy, in fact, that a blue ocean strategic move can create brand. Blue ocean strategy challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant. Blue ocean strategy focuses on the ability to create new market space where there is no competition and where the demand for the services becomes uncontested. Chan and mauborgne renee in their own bestseller book 5 and articles 6, 7, 4 and 8. Recognized as one of the most iconic and impactful strategy books ever written, blue ocean strategy argues that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. So powerful is blue ocean strategy, in fact, that a blue ocean strategic move can create brand equity that lasts for decades. In this ocean demand is created instead of fought over.
May 28, 2020 kim and mauborgnes 2004 blue ocean strategy is one of the major contributions in that context. Blue ocean strategy including examples and pdf download. Pdf the role of a blue ocean strategy on performance evaluation. The real opportunity is to create blue oceans of uncontested market space. Blue ocean strategy presents a systematic approach to making the competition irrelevant and outlines principles and tools any company can use to create and capture their own blue oceans. Chan kim and renee mauborgne are professors of strategy at insead and codirectors of the insead blue ocean strategy institute. These will be phrased as myths that are then debunked.
In the blue ocean term, the ocean is a metaphor for the market space in the industrial world where the companies operate. Pdf the basic assumptions of blue ocean strategy researchgate. Mar 19, 2019 blue ocean strategy, also referred to as blue ocean shift, is a marketing strategy where there is a single firm selling a differentiated product or there can be very few firms selling products that are differentiated in the market. Jul 27, 2005 the blue ocean is the unknown market place, untainted by competition.
Chan kim and renee mauborgne, professors at insead, and the name of the marketing theory detailed on the book. It develops mental horizons and helps in recognizing the opportunities. When expressed through a value curve, an effective blue ocean strategy has three complementary qualities. The blue ocean strategy in insurance industry case study nacfe.
In a few cases, companies can give rise to completely new industries, as ebay did with the online auction industry. Companies should instead look for new market space and ways to reinvent the industry. Dec 31, 2008 blue ocean strategy is a business strategy book that promotes creating new market space or blue ocean rather than competing in an existing industry. Apr 29, 2020 one of my favorite business books is called blue ocean strategy, written by w. It aims to make the competition irrelevant by reconstructing industry boundaries.
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