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Creating uncontested
market space. Explanation of Blue Ocean Strategy of W.
Chan Kim and Renée Mauborgne.
What is Blue Ocean
Strategy? Description
Rather than competing within the
confines of the existing industry or trying to steal customers from
rivals (Bloody or Red Ocean Strategy) W. Chan Kim and Renée Mauborgne
are suggesting Blue Ocean Strategy: developing uncontested market space
that makes the competition irrelevant.
According to Kim and
Mauborgne in the HBR of October 2004, competing in overcrowded
industries is no way to sustain high performance. The real opportunity
is: to create blue oceans of uncontested market space.
Competitive
Advantage critique
Of course competition is
important. But by focusing on competition and competitive advantage,
according to Kim and Mauborgne, scholars, companies, and consultants
have ignored two very important - and far more lucrative - aspects of
strategy:
* To find and develop blue oceans, and
*
To exploit and protect blue oceans. These challenges are very different
from those to which strategists have devoted most of their attention.
In blue oceans demand is created, rather than fought over. There
is ample opportunity for growth that is both profitable and rapid.
Two ways to create blue oceans
1.
One is to launch completely new industries, as eBay did with online
auctions.
2. It is more common for a blue ocean to be created
from within a red ocean when a company expands the boundaries of an
existing industry.
Certainly Kim and Mauborgne deserve credits
for having made the point of the over-focus on competitive advantage
and also for their beautiful metaphor of the two types of oceans.
Book: W. Chan Kim, Renée Mauborgne - Blue
Ocean Strategy
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