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Red Ocean:1. Existing Industry
2.Very High cutthroat competition
3. Market space very crowded
4. Prospect for Profits and growth are reduced
Blue Ocean:1. Industries that does not exist
2. Industry Boundries are not defined
3. Opportunity for growth & Profit is Rapid and high.
4. Competition is irrevelent because it doesnt exist.
My Take:
If you want to be the in the blue ocean then you got to be focusing on INNOVATION to be right up there.
Red oceans represent all the industries in existence nowadays.
Blue oceans indicate all the industries not in existence now.
We should utilize from the old industries to develop the new industries, nothing starts from scratch.
agreed with titus,,and bro sallam..
I do agree with Mr. Sallam
Its the indication of existance and non existance
Ironically, this industry is very much driven by buzzwords and fluffy "sexy" concepts that appeal to higher/executive management. Deep below the cosmetics layer , the concept remains basically the same. Hence, the industry needs to keep rolling this great jargon to give a facelift to the very same old concepts
Blue Ocean vs Red Ocear is no exception in my view. It is just reiteration of an old concept that I came across mid-nineties when I was still with IBM (in Saudi Arabia). Back then, I came across an important concept which I personally liked and worked on to turn it into a service to help my clients in their business streategy, approach and tactics.
The concept is about differentiation between "premium value items ... and ... commodity items" and the justification to ask for and expect higher profit argins and lower competition when focusing on premium value. Furtheron, I postulated the exitence of a hypothetical "commodity line" that keeps moving up with time, turning what used to be premium value (in the past) into commodities today and tomorrow.
This a very normal life cycle as new investions/innovations become well-known, more players get in the field, hgher competition arises, price wars happen, profits start to shrink, some players go out of the market, others get acquired, and things move on to the next big thing whatever it is !!
If I take project management for example, I remember15 years back, the PMP certification was rare, it took longer time, cost more money, and there were few players in this field. It was a pristige for a professional to have the PMP title next to his/her name.
Over the past15 years or so, things have changed, more and more people are getting the PMP designation, more players are now in the field to help individuals get this certification, high competition, lower costs, lower profit margins, no real added value here .
Other more advanced/higher value topics come as premium; PPM, PMO, OPM3, ... etc .. etc
Moving to these new premium value topics ( call it Blue Ocean if you wish) is nothing new, and this is how our indisutry is evolving and moving forward anyway !!
Red and blue oceans show the different approaches of companies about the competition and strategy.
those companies aim to become the "Number one", try to beat the competitors and precieve the competition like a sport contest or battle field move in red oceans.
instead the others who define the competition to become "Unique", look at the strategy as the best ways to generate the value move in blue ocean.
Red ocean strategy:
Compete in Existing Market space
Beat the competition
Exploit existing demand
Make the value-cost trade-off
Align all the firm's activities with its strategic choice of differentiation or low cost
Blue Ocean Strategy:
Create uncontested market space
Make the competition irrelevant
Create and capture new demand
Break the value-cost trade-off
Align all the firm's activities in pursuit of differentiation and low cost.
It,s only a limits
This is one framework for strategic thinking.
Red oceans represent all the industries in existence today—the known market space. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are well understood. In this space, companies try to outperform their rivals in order to grab a greater share of existing demand. As the space gets more and more crowded, prospects for profits and growth are reduced. Products turn into commodities, and increasing competition turns the water bloody.
Blue oceans denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.
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