Blue Ocean Book Review

2238 Words Feb 26th, 2008 9 Pages
Summary
The Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne is based on the premise of "how to create uncontested market space and make the competition irrelevant." A blue ocean strategy is in contrast to a red ocean strategy.

A red ocean represents the known market space which includes all industries in existence today. The rules of business here are well defined and companies within the red ocean play within accepted industry boundaries. The key to performing well in red oceans is to outperform the competition and gain greater share in the market space. The red ocean gets overfilled with competitors and products start to become commodities. This commoditization means that customers will become extremely price sensitive and
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Critique
The blue ocean strategy flies in the face of the traditional competition based strategies that are taught to most MBA students. Despite acknowledging that competition based strategy is necessary for red ocean companies to survive, the authors contend that they are not enough to maintain high performance.

Competition based strategies, such as those laid out by Michael Porter, are based off of a well defined set of boundaries which the book refers to as the structuralist view. Within these boundaries, companies fight for larger market share by seeing what the competition is doing and then doing it better. What is lost by one competitor in terms of market share is simply gained by another competitor and as such leads to a zero-sum game for the industry. Cost and value are seen as trade-offs which the company must make in order to establish a differentiated or cost position. A blue ocean strategy on the other hand is based on the idea of combining both differentiation and low cost through value innovation. This is in direct contrast to Porter's stance that a company must only pick one generic strategy to be successful whether that strategy be low cost, focus or differentiation.

Michael Porter's Competitive Strategy outlines strategies for companies as they fight within red oceans.

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