Commentary On The Blue Ocean Strategy

935 words - 4 pages

Introduction
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 ...view middle of the document...

Discussion
Meaning of Blue and Red Oceans
Red and blue oceans represent the entire market universe. At any given point in time, the sum of markets would be equal to the sum of red and blue oceans. The names given to them are based on their certain characteristics which are discussed below.
Blue Oceans
Rather than remaining concerned with playing by the rules, firms in blue oceans create their own rules. In red oceans, the strategy created by firms flows from the industry structure. Interestingly, in blue oceans, the structure of the newly born industry is shaped by the strategy of the company (Thompson & Strickland, pp. 314-316, 2003). All concepts of competition, competitors, wars, rivalry and others become completely irrelevant. Within red oceans, when the firms have an option for either going for low cost “or” differentiation, in blue oceans, these firms can go for both low cost “and” differentiation strategies. In blue oceans, firms do not try to capture the demand but they create new demand for new products and services (Kim & Mauborgne, pp. 2-6, 2004).
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.
Blue Ocean Strategy
Blue ocean strategy argues that rather...

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