Giribala
LEONEE A. VILUAN
BSMA - 4
RED OCEAN STRATEGY
The red ocean represents the existing market space. Companies in red oceans most often pursuecompetitive-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 STRATEGY
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).
DIFFERENCES OF BLUE OCEAN AND RED OCEAN STRATEGY
1. You want to be able to attract new customers to the business, instead of concentrating on only the current customers. This can be hard to do, so many business owners don 't even try; instead, they rely on their current customers, which means they are using the red ocean concept. With the blue ocean concept, concentrating on new customers
BSMA - 4
RED OCEAN STRATEGY
The red ocean represents the existing market space. Companies in red oceans most often pursuecompetitive-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 STRATEGY
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).
DIFFERENCES OF BLUE OCEAN AND RED OCEAN STRATEGY
1. You want to be able to attract new customers to the business, instead of concentrating on only the current customers. This can be hard to do, so many business owners don 't even try; instead, they rely on their current customers, which means they are using the red ocean concept. With the blue ocean concept, concentrating on new customers