Question

What is the premise of the Red Ocean/Blue Ocean strategy?

Answer 1

Solution _

Red ocean strategy :- This strategy involves competition among industries that are currently in existence . This requires overcoming an intense level of competition . It can often involve the commoditization of the industry where companies are competing mainly on price . The key goal of this strategy is to beat the competition and to exploit existing demand . Example of this strategy is soft drink industry , which is in existence for a long time and there are many barriers to entry . Coke and Pepsi are its leaders and many other small industries also exist and face cut throat competition for market share .

Blue Ocean Strategy : - Blue ocean strategy is based on the idea of differentiation and low cost to open up a new market space and creat new demand .This strategy is based on creating demand that is not currently in existence , rather than fighting over it with other companies . It is based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions and beliefs of the industry players . In this strategy there is a great potential of the marketplace which has not been explored yet . The key to a successful blue ocean strategy is to find the right market opportunity and making the competition irrelevant . The example of successful execution of a blue ocean strategy is the iPod introduced in 2001 .

Red Ocean VS . Blue Ocean Strategy :-

1 Red ocean compete in existing market space while Blue ocean create new market space .

2 Red ocean beats the competition while Blue ocean make competition irrelevant .

3 Red ocean exploits existing demand while Blue ocean creat and capture new demand .

4 Red ocean make the value cost trade off while Blue ocean break the value cost trade off .

5 Red ocean align the whole system of a firm's activities with its strategic choice of differentiation while Blue ocen align the whole system of a firm' s activities inpursuit of differentiation and lowcost .