Blue Analysis : Blue Ocean Strategy

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The term blue ocean was coined by two professors W.Chan Kim and Renee Mauborgne in their book titled “Blue Ocean Strategy: How to Create Uncontested Market Space and the Make Competition Irrelevant” (2005).

The authors present the idea of a business being able to operate in a league of its own, without intense competition. The company is able to set its own pace to create, sell and profit from unique products and services in high potential new markets. The blue ocean is taken as a metaphor to represent these industries that may offer greater opportunity or higher profit potential. This is the goal of any blue ocean strategy, to search for and gain uncontested market space instead of engaging in traditional
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Instead, for a company to achieve long term success, there need to be steps taken beyond the traditional red ocean strategy. For this to happen, companies need to go beyond competing with each other to take hold of new profit and growth opportunities that can be used to create blue oceans for their business.

The red ocean strategy takes a structuralist view of the market where all parties accept predefined structures within an industry and continue to compete within these. To sustain this competition, companies focus on building advantages over their competition. All gains are at the loss of another company and wealth is captured and redistributed instead of being created. As a result, wealth becomes increasingly limited.

The blue ocean strategy is a reconstructionist view of the market where no accepted boundaries or structure is present. The structure can be created or recreated by the steps taken by players in the market. Strategy and thinking is not limited by preconceived barriers, and a shift happens from a focus on the supply side to a focus on the demand side. Value innovation takes precedence over competing blindly with a simultaneous focus on differentiation and cost effectiveness. An emphasis on the demand side of the market leads to further wealth creation with high potential for payoffs.

In 2005, W. Chan Kim and Renee Mauborgne published their book titled the Blue Ocean
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