Tuesday, July 29, 2008

Look for your BLUE OCEAN

According to Kim and Mauborgne, authors of Blue Ocean Strategy, markets are made up of read and blue oceans. The red represents market space that's known already. This is where all industries currently exist with companies competing to outperform each other. However, the potential for growth is decreased when the market becomes congested. On the other hand, blue oceans are untapped market space. Kim says " Blue Ocean Strategy goes beyond competition by opening up a larger 'pie.' It challenges the traditional structuralist view of strategy that regards industry structure as fixed and given. In contrasts, Blue Ocean Strategy is based on a reconstructionist view of strategy whereby companies can shift the productivity frontier outwards by reconstructing market boundaries to create a bigger economic pie."

Compete in existing market space Create uncontested market space
Beat the competition Make the competition
Focus on existing customers Focus on non-customers
Exploit existing demand Create and capture new
Make the value-cost tradeoff (create greater value to customers at a higher cost or
create reasonable value at a
lower cost)
Break the value-cost tradeoff
(Seek greater value to
customers and low cost
Align the whole system of
firm’s activities with its
strategic choice of
differentiation or low cost
Align the whole system of a
firm’s activities in pursuit of
differentiation and low cost.

source: http://knowledge.insead.edu

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