Blue Ocean Strategy: Creating Uncontested Markets
Mr. Nour Saleh Jaber
Introduction: In the highly competitive business world, companies often compete in crowded markets, known as "red oceans," where profits are diminishing and growth is limited. Blue Ocean Strategy, developed by W. Chan Kim and Renée Mauborgne, offers an attractive alternative: Instead of competing in existing markets, it calls for innovating new, uncontested markets, or "blue oceans," where competition becomes irrelevant. In "red oceans," companies fight for a shrinking share of profits, much like sharks competing in blood-soaked waters. "Blue oceans," on the other hand, represent vast, deep, and untapped market spaces where companies can grow rapidly and profitably. The essence of blue ocean strategy lies in creating innovative value, achieved through the simultaneous pursuit of differentiation and low cost. This means that instead of choosing between delivering greater value to customers at a higher cost or offering acceptable value at a lower cost, companies seek to deliver unprecedented value at a reasonable cost, thereby creating new demand and penetrating new markets. Basic Principles of Blue Ocean Strategy: Blue ocean strategy includes several fundamental principles that guide companies in their quest to innovate new markets: Reconstructing Market Boundaries: This principle requires companies to challenge traditional assumptions about the boundaries of the industry in which they operate and seek opportunities beyond these boundaries. Focusing on the Big Picture: Rather than being preoccupied with minutiae and numbers, companies should focus on the overall strategic vision that guides their decisions. Going Beyond Current Demand: Companies should not only focus on meeting the needs of existing customers but should also seek to understand and meet the needs of non-customers who are not yet participating in the market. Getting the Strategic Sequence Right: When implementing a blue ocean strategy, it is essential to follow a logical sequence that begins with offering exceptional value to the buyer, then setting an attractive strategic price, and finally managing costs to ensure profitability. Overcoming Organizational Obstacles: Companies often face internal resistance when attempting to move away from the status quo. Therefore, it is essential to address these organizational obstacles and secure employee support for the new strategy. Building Execution into Strategy: It's not enough to have a good strategy; you must also ensure it can be effectively executed. This requires aligning all aspects of the organization, from structure and culture to incentives and resources, with the new strategy. Examples of Blue Ocean Strategy: Many companies have successfully implemented blue ocean strategy to create new markets and achieve massive growth. Prominent examples include: Cirque du Soleil: This circus reinvented the traditional circus industry by combining elements of theater, ballet, and opera, attracting a whole new audience of adults and businesses. Netflix: This company changed the way we consume visual content by transitioning from a DVD-by-mail rental service to an online streaming service, creating a new market for on-demand movies and TV shows. Apple (iPod): This device revolutionized the music industry by combining sleek design, ease of use, and a vast digital music library, making portable music accessible to everyone.
Conclusion: Blue ocean strategy provides a practical framework for companies seeking to break free from fierce competition and achieve sustainable growth. By focusing on value creation and creating new markets, companies can open new avenues of success and thrive in the ever-changing business world.
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