It was tough choosing the section for this article but I think I did the right thing :p *berate me later*
About 2 yrs ago, Dad encouraged me to read the Blue Ocean Strategy book to learn more about beating the competition...somehow I never got around to it *whistle*
Written by W. Chan Kim & Renée Mauborgne, this business strategy book presents the blue ocean stratedy where the basic principle is not to out-perform the competition in the existing industry, but to create new market space or a blue ocean, thereby making the competition irrelevant.
We use the terms red and blue oceans to denote 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 untouched, vast and deep in terms of profitable growth.
Comparison between Red Ocean & Blue Ocean Strategy
Blue ocean strategy provides a systematic approach to break out of the red ocean of bloody competition and make the competition irrelevant by reconstructing market boundaries to create a leap in value for both the company and its buyers. Instead of competing in existing industries, blue ocean strategy equips companies with frameworks and analytic tools to create their own blue ocean of uncontested market space. The book, however, tackles not only the challenge of how to create blue oceans, but also the equally important challenge of how to execute these ideas in action in any organization.
The concept is fascinating because it's not about killing the competition, it's about finding that niche that these competition is no longer a pain in the arse. Cool, eh? Save the bullet & get a bigger chicken hehe.
Dad was right, this is interesting. I've to remember to hunt him down for the book! :p
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