This paper is an attempt to explore the Blue Ocean Strategy which surfaced in the year 2004 and within a few months, it revolutionised thinking patterns and decision making processes of many firms around the world. The terms “red oceans” and “blue oceans” became the part of the business dictionary and many business related journals started using these terms.
It links to the themes of “critical response” and “critical thinking” because the very creation of Blue Ocean Strategy is a challenge or disapproval of the entire field of strategic management, the field of study which has been studied, explored and discussed by many well-known authors over the past five decades and even before that. Where strategic management has been constantly emphasising to outclass the competition, blue ocean strategy cites this approach as short minded and insufficient and instead, preaches the creation of blue oceans to make the competition irrelevant. The reasons why authors of this strategy came up with the blue ocean strategy was because the engaged in the process of critical thinking and critical response and gathered the courage to challenge the mainstream and widely held assumptions about competition. Despite the fact that concepts of innovation and creativity did exist before the advent of blue ocean strategy, Blue Ocean Strategy provided the business and an academic world with a new lens to look at innovation, creativity and value creation (Thompson & Strickland, pp. 314-316, 2003). When as of today, there are many scholars which disagree to the theory as cite it as irrelevant, inconsistent and not having enough theoretical and research grounding. On the other hand, there are scholars who are engaged in the process of defending the theory thus creating an ongoing process of dialogue, critical thinking and critical response. The paper also explores those criticisms and makes an attempt to provide the answers for them.
Table of Contents
INTRODUCTION
DISCUSSION
MEANING OF BLUE AND RED OCEANS
Blue Oceans
Red Oceans
BLUE OCEAN STRATEGY
PORTER FIVE FORCES MODEL AND RED OCEANS
Threat of Competitive Rivalry in Red Oceans
Bargaining Power of Customers in Red Oceans
Bargaining Power of Suppliers in Red Oceans
Threat of New Entrants in Red Oceans
Threat of Substitutes in Red Oceans
STRATEGIC MANAGEMENT – THE FLIP SIDE OF BLUE OCEAN STRATEGY
CRITICISMS AND MISUNDERSTANDINGS ABOUT BLUE OCEANS
EXAMPLES OF BLUE OCEAN STRATEGY
CONCLUSION
Objectives and Core Themes
This paper aims to explore the concept of Blue Ocean Strategy, examining how it challenges traditional strategic management paradigms that focus on competitive rivalry. It investigates the fundamental differences between "red oceans" and "blue oceans," addresses common criticisms and misconceptions, and evaluates the effectiveness of creating uncontested market space through value innovation.
- Theoretical distinction between Red Oceans and Blue Oceans
- Critique of the Porter Five Forces model in saturated markets
- The role of "value innovation" as opposed to traditional competitive moves
- Empirical analysis of firm performance in contested vs. uncontested markets
- Case study examinations of successful Blue Ocean implementations
Excerpt from the Book
Red Oceans
Red oceans or in other words, the known market place, refers to the market universe which is in existence today. The boundaries, limitations, rules and regulations within these red oceans are well defined and well known to the industry players. Here, the only way to expand the share of the market is to steal the market share of the other players thus inducing cut throat competition (Kim & Mauborgne, pp. 63-64, 2005). Firms which are present in red oceans are more likely to engage in price wars, aggressive marketing, heavy promotional campaigns and rivalry which have cost these firms trillions of dollars, all in the pursuit of beating one another but towards the end of the day, they are at the same level. Supply is most likely to exceed demand in these industries thus inducing firms to fight.
Summary of Chapters
INTRODUCTION: Provides an overview of Blue Ocean Strategy as a revolutionary management concept introduced in 2004 that challenges traditional competition-based strategic thinking.
DISCUSSION: Defines the market universe as a combination of red and blue oceans based on their inherent characteristics.
MEANING OF BLUE AND RED OCEANS: Explains that red oceans involve competing within existing industry rules, while blue oceans involve creating new demand and market space.
BLUE OCEAN STRATEGY: Argues that firms should redirect resources toward creating new market fields rather than attempting to beat competition in existing ones.
PORTER FIVE FORCES MODEL AND RED OCEANS: Utilizes Michael Porter’s model to illustrate why industries in red oceans suffer from low profitability due to high competitive forces.
STRATEGIC MANAGEMENT – THE FLIP SIDE OF BLUE OCEAN STRATEGY: Critiques traditional strategic management for its military-based language and "do or die" approach to competition.
CRITICISMS AND MISUNDERSTANDINGS ABOUT BLUE OCEANS: Addresses scholarly debates, clarifying that blue ocean strategy is not just about new technology but about value innovation.
EXAMPLES OF BLUE OCEAN STRATEGY: Highlights real-world successes such as Southwest Airlines and Cirque du Soleil in finding uncontested market space.
CONCLUSION: Synthesizes research findings to suggest that while red ocean presence is common, firms must seek blue oceans to achieve superior long-term profitability.
Keywords
Blue Ocean Strategy, Red Oceans, Strategic Management, Value Innovation, Competitive Rivalry, Porter Five Forces, Market Universe, Uncontested Market Space, Business Strategy, Innovation, Market Share, Customer Satisfaction, Corporate Profitability, Industry Structure, Differentiation.
Frequently Asked Questions
What is the primary focus of this paper?
The paper explores the Blue Ocean Strategy, a management concept that suggests companies can achieve higher profitability by creating uncontested market space rather than fighting competitors in saturated "red oceans."
What are the central themes discussed in the text?
The central themes include the contrast between red and blue oceans, the critique of traditional competitive strategies, the necessity of value innovation, and the practical application of these concepts in business.
What is the core objective of the research?
The objective is to examine how Blue Ocean Strategy challenges the mainstream assumptions of strategic management and to provide an analytical response to common criticisms of the theory.
Which theoretical models are used to frame the analysis?
The paper heavily utilizes Michael Porter’s "Five Forces Model" to analyze competitive rivalry, supplier/buyer power, and threats of substitution within red oceans.
What does the main body cover?
The main body covers the definitions of market oceans, an analysis of competitive forces, a critique of traditional strategy, the addressing of misconceptions regarding the theory, and evidence from successful industry cases.
Which keywords best characterize this work?
Key terms include Blue Ocean Strategy, Red Oceans, Value Innovation, Competitive Rivalry, Strategic Management, and Uncontested Market Space.
How does the paper address the role of technology in Blue Ocean Strategy?
The paper clarifies that new technology is not a prerequisite for a blue ocean. It emphasizes that value innovation can occur without technological breakthroughs, as seen in the case of the mutual funds industry.
Why does the author use the example of Cirque du Soleil?
Cirque du Soleil is used to illustrate how a company can redefine an industry in decline by attracting new customer segments through value innovation rather than merely trying to compete for a shrinking market share.
- Arbeit zitieren
- Aldridge Menzel (Autor:in), 2011, CPLM Blue Ocean Strategy, München, GRIN Verlag, https://www.grin.com/document/270839
