Blue Ocean Strategy

Hai everyone.. We meet again.. Hope we all in a good conditions.. for this entry, I want to share about Blue Ocean Strategy.. ^_

Red Ocean

The red ocean represents the existing market space. Companies in red oceans most often pursue competitive-based strategies, aiming to get a bigger share of the market from their competitors - thus the bloody competition - red ocean metaphor. This approach is called the structuralist view of strategy, meaning that companies adapt their behavior (strategy) to the existing industry's conditions.

However, this approach is limited. Due to globalization, lowering cost of production and availability of information, the competition is more fierce some than ever in most industries, putting more pressure on companies and shrinking their profit margins. In this competition race, products and services tend to become commoditized much faster.

Blue Ocean

The blue oceans are new markets created by companies following conscious strategic decisions. The creation of a new market space gives companies a natural monopolistic position, which the company can take advantage from. This is called the reconstructionist view of strategy, meaning that companies recreate the boundaries of an industry (which are mental barriers, anyway), as a result of the strategy they pursue.

However, Blue Ocean Strategy does not encourage companies to behave monopolistically, as it will hurt them in longer term. Instead, companies must price their service/product strategically, to win a mass of buyers, which results in a win-win situation for the buyers (value proposition), for the company (profit proposition) and for the employees (people proposition).

The differences between the two approaches:

“Blue ocean strategies are really working and more companies are using them to find growing, unmet needs in the new, ever-evolving global marketplace. I have seen this occur in industries as diverse as hydration system manufacturing, financial services, and construction."  

Andrea SimonPrincipal & Founder, Simon Associated Management ConsultantsForbes

            Ok, bye.. see you in another entry J