In today's world of cut-throat competition, a lot of companies and businesses are looking for strategies to stay ahead of the competition.
As such, there are several business strategies that a company can adopt.
A choice should be made based on individual preferences and requirements.
In recent times, the popularity of blue ocean strategy has increased tremendously.
Written by Renee Mauborgne and Chan Kim, blue ocean strategy involves exploiting an unchallenged market space and attaining high profits and growth.
The authors had analyzed the strategic moves of more than a hundred industries before writing this book.
According to them, companies of tomorrow will have to create uncontested markets in order to achieve success, rather than battling competitors.
Red ocean and Blue Ocean are two key metaphors that have been used by the authors to describe the current market universe.
Red ocean refers to the current crop of businesses and industries.
The boundaries of each industry are accepted and defined.
Companies are also aware of the rules and strategies of the game.
In Red Ocean, companies have to outperform their competitors in order to achieve profits.
Since boundaries are defined, the market space will get crowded with the arrival of new companies.
As a result, the growth and profits of companies will get reduced.
Red ocean is an analogy to cutthroat competition.
Blue Ocean, on the other hand, includes all companies that are yet to form.
Hence, the market space is not defined and there is no competition.
In this concept, demand has to be created rather than contesting them.
Growth opportunities are high and companies can achieve windfall profits very quickly.
Blue Ocean symbolizes an untapped market space that has a wide and deep potential.
Value innovation is an important term associated with this strategy.
The innovation can be a product or service.
In order to create a blue ocean, the innovation should create value for both the client and company.
Another feature of this strategy is that it works best when the demand is lower than supply.
Among the various business strategies available today, competition based ones offer the stiffest opposition to this strategy.
While the authors of this book admit that competition based strategies can be successful, they will not be adequate for sustained high performance.
Opportunities for growth and profit are limited in competition based strategies.
Various tools, frameworks and methodologies are included in the book so that a blue ocean may be created systematically and repeatedly.