A Layman’s Guide to Blue Ocean Strategy (PART -1)

We always envisage competition among organization’s as a fiercely competitive war of strategy which is based on Porter’s famous Five forces model (given below) and that does not help any of the organizations’ much.

 

The Entry of Competitors:

The Threat of Substitutes:

The Bargaining Power of Buyers:

The Bargaining Power of Suppliers:

The Rivalry Among Existing Players:

 

However according to famous strategists W. Chan Kim and Renee Mauborgne, the best way to beat the competition is to stop trying to beat the competition.

Market can be classified into two categories - Red and Blue Ocean. Red ocean signifies already occupied and fiercely competitive market which has been described earlier. However Blue Ocean refers to unexplored market/possibilities which will provide maximum profit to the organization through right strategy and innovation.

 

Below are the considering factors for leveraging Blue Ocean Strategy:

i.                     Explore redundant processes/objects that can be totally eliminated to add real value.

ii.                   New Standard Should be reduced well below industry’s standard.

iii.                 New Standard Should be raised well above the industry’s standard

iv.                 New Opportunities/Market Should be created.

                                                                                                                             (Contd.)