Thus, this strategy allows the company to focus on business patterns rather than customers. These are the totally new features that the company never provided. Red Ocean or Blue Ocean Strategy!! Red Ocean Strategy Blue Ocean Strategy; Compete in existing market space. The innovation management model being discussed for this paper is called the “green ocean strategy” which is a hybrid theory derived from the more popular theories, “blue ocean strategy” and “red ocean strategy”.  W. Chan Kim and Renée Mauborgne together introduced the Blue ocean strategy in 2005. It is a simultaneous process of opening a new business market and creating new demand, therefore, competition is irrelevant. 6. A path-breaking strategy known as Blue Ocean Strategy is a pacifist marketing scheme and is considered a strategic planning tool for assessing a business. All rights reserved. ITunes’s blues ocean strategy created a new way of selling music legally, where consumers and artists became mutually benefited. The Blue Ocean strategy can lead to expansion of the business through increased profits. Blue Ocean Strategy Challenges. This blog article is a overview of some of the key points of the book by W. Chan Kim and Renée Mauborgne.In this article you will learn how to make your competition irrelevant and have sales and profit … You try to find a way to beat the market in a crowded space and exploit current demand rather than creating a demand. This created a blue ocean (as families bought the devices, not hardcore gamers) and lead to big margins for Nintendo as the Wii machines we cheaper to make than more advanced machines. Before launching iTunes, consumers download a song illegally from the internet platform. Explain the industry and market dynamics of Ford’s Model T blue ocean strategy. Focus on current customers vs. focus on non-customers. For example, "competing factors" in blue ocean strategy are similar to the definition of "finite and infinite dimensions" in Funky Business. Customer Focus Red Ocean strategy focuses on existing stream of customers. Rather than competing for a slice of an increasingly shrinking pie – the red ocean strategy – a blue ocean strategy sees a business creating a pie of … Blue Ocean Strategy was first published in 2005. Published on January 3, 2020 January 3, ... Two Examples of using Blue ocean strategy within a red ocean existing industry . The company also broadens the area of business to come up with new products or services for the customers, therefore customers are irrelevant here. © Chan Kim & Renee Mauborgne (2004-2021), We use cookies to ensure you get the best experience on our website and continuing implies your consent -, Align the whole system of a firm’s activities with its, Align the whole system of a firm’s activities in. Red oceans are all the industries in existence today – the known market space. Still, it is dominating the marketplace of music platforms for years. Often times, the only way to compete in a Red Ocean is to choose the strategy of low cost or To swim in the Blue Ocean, the business must overcome three core challenges: Recognize a blue ocean against a red ocean. Cirque de Soleil. Blue Ocean Strategy: Ten Difference Between Red and Blue Ocean Strategyeval(ez_write_tag([[250,250],'newsmoor_com-box-3','ezslot_0',155,'0','0'])); Blue ocean strategy refers to the uncontested marketing policy that focuses more on the new innovation to reinvent the business rather than head-to-head competition. Nintendo created a blue ocean when it launched the Wii. At the end of the day, they are doing business among the same customers. From the perspective of the red ocean strategy, the industry is doing business with the customers where some industries gain more clients and some other industries lose clients. Therefore, Zoom managed to win the competition in a bloody red ocean. Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne. These are the very important factors that need to be increased to fulfill the industries well above standards. There are several examples of the blue ocean strategy all over the world that have been accepted by many industries to get benefits such as Canon, iTunes, Cemex, Philips, Netjets, Curves, JCDecaux, Quicken, Polo Ralph Lauren, and so on. These factors are well below the industry’s standard. Like the ‘blue’ ocean, it is vast, deep and powerful –in terms of opportunity and profitable growth. (Dr.) The company will earn more money if it can bring more customers to its umbrella. In the 1890s, the horse and buggy was the primary mode of … CONTENTS • Red Ocean Strategy • Customer Value • Examples of Red Ocean • Red vs. Blue Oceans • Comparing of both Oceans • Advantages • Disadvantages • Conclusion 3. Examples of Blue Ocean Strategies Netflix The first company that used the blue ocean strategy a popular subscription-based streaming service. Examples of Blue Ocean Strategy. Apple entered into the digital music industry in 2003 with its product iTunes. So, this strategy creates an uncontested market to serve its customers. Just as blue ocean strategy claims that a red ocean strategy does not guarantee success, Funky Business explained that "Competitive Strategy is the route to nowhere". This is the best way of getting the most benefit with the least price within the total product market. In Red Oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. The Google Project Ara is currently in the process of being made and will be the first totally customizable smartphone. W. Chan Kim & Renée Mauborgne coined the terms red and blue oceans to denote the market universe. Creating blue oceans. The blue ocean strategy never suggests the company compete because it makes a new uncontested marketplace. The essence of the blue ocean strategy is to come up with a product or service that will create a blue ocean for the company. Newsmoor Provides information: corporate, human, journalism, and broadcasting communication. In short, Red ocean strategy refers to competing for the existing marketplace where the blue ocean strategy denotes making a new uncontested marketplace. ‍ In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. The following will discuss examples of a blue ocean strategy and red ocean strategy and the pros and cons to each. The product and service are totally new therefore no company will come to compete with you. Blue Ocean Strategy Example 1: Automobile Industry. These factors also can be made more contribution in the past but now useless, so you need to eliminate them because of becoming obsolete at the present time.eval(ez_write_tag([[120,600],'newsmoor_com-large-mobile-banner-2','ezslot_8',168,'0','0']));eval(ez_write_tag([[120,600],'newsmoor_com-large-mobile-banner-2','ezslot_9',168,'0','1'])); .large-mobile-banner-2-multi-168{border:none !important;display:block !important;float:none;line-height:0px;margin-bottom:15px !important;margin-left:0px !important;margin-right:0px !important;margin-top:15px !important;min-height:600px;text-align:center !important;}. Blue Ocean Strategy (Chan Kim and Renee Mauborgne) was released in 2005 by Harvard Business School Press. System Approach In Red Ocean strategy system approach is towards low cost and differentiation In Blue Ocean strategy system approach is towards creativity and innovation. Research Methodology, Study Abroad. It also assesses the gains that matter with this template and the pains that matter for your product. When the iPod was introduced in 2001, Steve Jobs said that “with [the] iPod, Apple has invented a whole new category of digital music player that lets you put your entire music collection in your pocket and listen to it wherever you go.” Maximizes opportunity while minimizing risks. With the increasing popularity of the Internet, Netflix has become a streaming service with a wide choice of films and TV series Later they launched their shows and movies available only on their platform. However, this discussion will also include the more recently expanded 2015 edition. Companies that are already in existence may make a solid decision to come out of the usual … In contrast, the blue ocean strategy, the industry tries to change the pattern of the business to yield something new for the customers. Shows you how to create a win-win outcome. A Blue Ocean Strategy may come out of a Red Ocean Strategy. iTunesApple product iTunes is an example of Blue Ocean Strategy. The main point of the blue ocean strategy is to stop competing with other companies, i.e. Red Oceans vs Blue Oceans and business strategy. Red Ocean Strategy Overview The Red Ocean Strategy is about competing in an existing market space that is generally crowded. In most industries there is little effort to … Advantages and Disadvantages, Pros and Cons. Summary Of The Blue Ocean Strategy © Chan Kim & Renée Mauborgne. What is the traditional basis of ‘competitive advantage’ in red ocean strategies? SARAH GREEN: So Blue ocean strategy is about how can any company or organization break out of the red ocean of bloody competition or existing market space, which tends to … Cite examples from the article. Explain the redefined relationship between ‘value’ and ‘low cost’ in blue ocean strategies. A company will have more success, fewer risks, and increased profits in a blue ocean market. They compete with each other for selling more products and services to increase profit margins. So, they always intend to beat the competitors through marketing policy, product quality, and services. It will help the company to create a new marketplace distinguished from the competition. To create these new features, you need to investigate the customer’s desire to fulfill. Find out the factors where you give huge investment and efforts, but getting very little output. For example, in order to exceed the customer’s challenges, the company needs to rebuild features of the industry. Red Ocean Strategy. One example of a blue ocean strategy is the Google Project Ara. Red oceans are all the industries in existence today – the known market space, where industry boundaries are defined and companies try to outperform their rivals to grab a greater share of the existing market. #BlueOceanShift and #BlueOceanStrategy are worldwide business strategy bestsellers, helping you to move beyond competing and start creating your #blueocean. There are several examples of the blue ocean strategy all over the world that have been accepted by many industries to get benefits such as Canon, iTunes, Cemex, Philips, Netjets, Curves, JCDecaux, Quicken, Polo Ralph Lauren, and so on. It makes a totally new marketplace for the industry. It turns into a red ocean: a competitive market. iTunes solved the problem of recording industries when it started the business. In their classic book, Blue Ocean Strategy, Chan Kim & Renée Mauborgne coined the terms ’red ocean’ and ‘blue ocean’ to describe the market universe. Learn the essentials of blue ocean strategy and shift created by the #1 Management Thinkers in the World. iTunes making an easy and convenient way of distributing music by making traditional sources of distribution of music irrelevant. See examples of strategic moves that enabled organizations to successfully break out of red oceans and create blue oceans of uncontested market space. The eight key points of the Blue ocean strategy are as follows; Figure 1: Differences Between Red Ocean and Blue Ocean Strategyeval(ez_write_tag([[300,250],'newsmoor_com-banner-1','ezslot_2',166,'0','0'])); In the red ocean strategy, most industries focus on attracting existing customers to sell more products and services. Based on the discussion, it is safe to say that the blue ocean is a better way that can bring fewer risks, more success, and increased profits for the company. Despite resisting intense competition for years, this project drew the attention of its end users because it satisfied their major need: a simple and free of charge tool for holding conferences online. Secondly, you need to identify factors that are not completely necessary for the industry and also can not contribute to the industry’s benefit properly. Figure 2: Blue Ocean Four Action Frameworks, First of all, you have to think about the factors of the industry that need to be eliminated because of defectiveness. Example of Blue Ocean Strategy. Blue Ocean Strategic Moves. Blue Ocean Strategy Examples. 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). For years gaming companies had focussed on making better and better machines, Nintendo focussed my making the Wii fun. June 13, 2017 Blue Ocean Systems. 22Prof. For anyone tired of competing head-to-head and not getting far. Thus, they focus on the current customer to make a benefit by selling products and services. RED OCEAN Prof. W. Chan Kim and Renee Mauborgne in 2005 Competition within market space “Known” market Number of competitors To illustrate how Blue Ocean Strategy can be used in a variety of industries, we’ll cover three very different industries – automobiles, computers, and movie theaters. Using the framework for building a compelling blue ocean strategy, we will apply the Blue Ocean Strategy Canvas to healthcare across three areas: Where the competition is investing. It is all about devising and acquiring the uncontested market forum by spawning a new demand. This list would not be complete without mentioning Cirque de Soleil, arguably one … The authors were co-directors of the INSEAD Blue Ocean Strategy Institute. Chan Kim and Renée Mauborgne developed the four action frameworks to destroy the trade-off between low cost and differentiation and to rebuild an industry’s strategic logic. Blue Ocean Strategy - Including Examples And PDF Download. They managed to make a new category of music selling through digital music platform for listeners. With the introduction of this product, it becomes easy for the Apple users to download original and high-quality music at a reasonable price. An example of a successful execution of a blue ocean strategy is the iPod. Blue ocean strategy focuses on creation of new customers. They are competing with each other to get more customers. The blue ocean strategy, on the other hand, involves finding, developing or creating new and uncontested markets. They were also INSEAD professors. Cutthroat competition turns the ocean bloody red. Our theory is not to be confused with similarly-named strategies that deal with environmental impact of business; rather, To do it, you have to start by watching what your market has and, more than that, what it doesn’t have. Discover each of the tools and learn HOW to put them into practice with exercise templates. Hence, the term ‘red’ oceans. The blue ocean strategy makes the competition irrelevant because they need not compete with other industries to sell products and services. Zoom’s story is a vivid example of the red ocean strategy. How to Use Four Action Templates, Eliminate, Reduce, Raise, Create. INSEAD is a prestigious graduate business school in Fontainebleau, France.INSEAD also has campuses in Singapore and Abu Dhabi. Let's Make Your Business Digital With Lapaas.Join Our Most Advanced Digital Marketing Course. Newsmoor Is The Best Educational Website For Students To Learn Online Free. In most industries there is little effort to … Red Oceans are described as all the industries in existence today: the known market space. 1-Samsung: The industry also can create new products or offer new services for consumers in an innovative way. Blue oceans denote all the industries not in existence today – the unknown market space, unexplored and untainted by competition. The competition must exist in the marketplace of the company that follows the red ocean strategy. Hence, the blue ocean strategy and the four action frameworks have become an innovative invention for the business arena. Most companies have a hard time of identifying both. For example, the higher cost of manufacturing of the product can be reduced. What does this mean? iTunes solved the problem of recording industries when it started the business. The research 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… … It also represents the communication model and theory with images. The four Actions Template determines whether the investment money in the proper ways around the product to maximize consumer gain and minimize consumer pain. Blue ocean strategy is based on over decade-long study of more than 150 strategic moves spanning more than 30 industries over 100 years. Focus on current customers vs. focus on noncustomers. The letters INSEAD stand for Institut Européen d’Administration des Affaires, which translates into English as the European Institute of Business Administration. The chart above summarizes the distinct characteristics of competing in red oceans (Red Ocean Strategy) versus creating a blue ocean (Blue Ocean Strategy). Social Media Revolution: Advantages & Disadvantages of Social Media, Emotional Intelligence (EQ): Importance & Characteristics of EQ, How To Improve EQ, 5 Gaps Model of Service Quality- Servqual Gaps Model or 5 Gaps Model, VALS Segmentation Model in Consumer Behaviour- VALS 2 Model, COVID-19 Pandemic Impact- History Background of Coronavirus, Group Communication Barriers: 4 Types of Barriers in Group or Team Communication, Speech Critique Sample: How to Critique a Speech Example- Lisa Kamal, Intend to provide better service to buyers, Difference between Red and Blue Ocean Strategy. In addition, the four action templates appear as the best solution to identify the investment of the industry is in the proper way or not. 5. Get ready to stop struggling and seize new growth !