Menu


(Blue Ocean Strategy)

The Blue Ocean Strategy is a strategic framework for businesses and organizations to create new markets or industry segments with reduced competition. It was developed by W. Chan Kim and Renée Mauborgne in their 2005 book, “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant.”

The concept of the Blue Ocean Strategy is based on the idea that markets can be divided into two categories: red oceans and blue oceans.

  1. Red Oceans: These represent existing markets where competition is intense, and companies are essentially fighting for market share. In red oceans, competitors often engage in price wars, and innovation is incremental.

  2. Blue Oceans: These represent untapped, uncontested market spaces. In blue oceans, companies create new demand by offering products or services that are different from, and superior to, existing offerings. The focus is on innovation, value creation, and differentiation, rather than competition.

To implement a Blue Ocean Strategy, organizations are encouraged to:

  1. Value Innovation: This involves simultaneously pursuing differentiation and low-cost strategies, creating a unique value proposition for customers.

  2. Erase-Reduce-Raise-Create (ERRC) Grid: This is a tool used to identify strategic moves. It involves eliminating factors that the industry takes for granted (Erase), reducing factors that can be lowered (Reduce), increasing factors that can be improved (Raise), and creating entirely new factors (Create).

  3. Six Paths Framework: This framework helps in identifying new market opportunities by exploring alternative paths that include looking across different industries, strategic groups, buyer groups, complementary product and service offerings, functional and emotional appeal, and time.

  4. Four Actions Framework: This framework helps in making strategic choices by prompting questions related to reducing, eliminating, raising, and creating factors within the industry.

The ultimate goal of the Blue Ocean Strategy is to break away from head-to-head competition and shift the focus toward creating innovative products or services that attract new customers and make the competition irrelevant. By doing so, companies can achieve sustainable growth and higher profit margins. It has been applied in various industries and sectors to achieve business success by finding uncontested market space.