The article called “Blue Ocean Strategy” written by W. Chan Kim and Renee Mauborgne elaborates on the best and most efficient way of achieving a high business performance by means of creating an uncontested market space. The title of the article reflects the term accepted for this kind of market space. Blue ocean is an absolutely new market field unknown to all of the competitors. The creator of the market immediately earns unlimited opportunities for further development and gets to explore the new field of market without any rivalry.
The new and uncontested sphere of market makes the competition irrelevant, so while all other companies and business makers struggle in the red ocean full of sharks fighting for influence, power and revenues, the inventor of the blue ocean is freed from the stresses of business competition. The main responsibility of the company establishing a new sphere of market is to promote and advertise its product or services in order to attract attention of the potential customers and create interest towards the new business.
In order to emphasise the phenomena of blue oceans in the modern business arena, the authors of the article invite the readers to go back in time and remember what our world was like thirty years ago. This simple activity demonstrates amazingly popular industries that were basically non-existent back then, among such businesses there are cellular phones, snowboards, coffee bars, home video and discount retailing (Kim, Mauborgne, 78).
Of course, new industries quickly become noticed by business makers, more similar brands start to occur, and as a result, the industries become overcrowded. For example, the huge variety of toothpaste or washing powder brands makes the manufacturing companies turn to special offers and, price reduction and discounts in order to attract buyers and fight for their attention.
The authors of the article also explore the reason why most of new businesses emerge within the red oceans, building line extensions. Statistically, only fourteen per cent of new businesses are oriented at creating new fields of market (Kim, Mauborgne, 80). In the article it is noted that the modern approach and understanding of business development is very close to military strategy. It even employs military terms such as “headquarters”, “officers” and “front lines”. Making business today is seen by many as war. Battling the rivals is viewed as a necessary process and the key to success. At the same time, blue ocean strategy, on the contrary, is focused on developing a business without rivals and battling.
Blue oceans are not focused on innovation of existing technologies, but on creation new products and services. They often are discovered by incumbents within the red oceans they came from, which shows that every red ocean contains multiple possibilities for the creation of a blue ocean. This approach is not based on the standard tactics of investing costs in order to increase value or reduce costs and lose value. In order to create demand business makers need to re-evaluate the components of their offer.
The authors of the article emphasise that the creation of blue oceans is done through the “reconstructionist view” that rejects the trade-off between the low cost and differentiation (Kim, Mauborgne, 83). The creation of blue oceans is easy to imagine but not easy to put into practice. These new fields of market are incredibly attractive because they have the capacity of providing its creator with an uncontested market and very high revenues for ten to fifteen years.
Works Cited
Kim, W. Chan, Renee Mauborgne. “Blue Ocean Strategy”. Harvard Business Review (2004): 76-84.