Blue Ocean Strategy Criticism
Risk associated with being first mover(entry order). 1. Being overtaken by 2nd mover Facing market risk – market not formed yet
Customer uncertainty and extended time for adaptation
Charles Stack 1st online book store lost its market share for Amazon.com invest highly in R&D and marketing cost Follower strong product positioning, pricing and heavy promotion firm has to be aware of fast, aggressive and imitating followers that will neutralize all the firm’s efforts and investments and decrease firm dominance cost of imitation is only about 65% of the cost of innovation market development, competitive actions and technological development it is not easy to shape industry conditions have to be taken into account Mauborgne must have high entry barriers, in order to block out the competitive actions or consider them irrelevant Thus, the theory simplifies the complex world, but as it oversimplifies and neglects other possible situations in the industry, it adds little value in explaining to route so success.
2. most fundamental assumption of the Blue Ocean theory is that industry’s conditions can be shaped by a firm’s efforts. The red ocean describes a situation where existing industry rules are readily formed, static and cannot be changed. While the possible occurrence of a blue ocean encourages the creativity and learning, the red ocean claims that learning is ineffective in such situation. The assumptions behind the two are therefore not coherent with each other, but also do not give an insightful explanation either, as a good theory should be. 3. The thought that industry conditions can be shaped is not new either. are based on the Schumpeterian view that business strategies should be entrepreneurial and creative and should follow a strategy that breaks the market and industry rules. And because this assumption is not new, it creates little insights to the development in this research area. The Blue Ocean theory therefore does not
Customer uncertainty and extended time for adaptation
Charles Stack 1st online book store lost its market share for Amazon.com invest highly in R&D and marketing cost Follower strong product positioning, pricing and heavy promotion firm has to be aware of fast, aggressive and imitating followers that will neutralize all the firm’s efforts and investments and decrease firm dominance cost of imitation is only about 65% of the cost of innovation market development, competitive actions and technological development it is not easy to shape industry conditions have to be taken into account Mauborgne must have high entry barriers, in order to block out the competitive actions or consider them irrelevant Thus, the theory simplifies the complex world, but as it oversimplifies and neglects other possible situations in the industry, it adds little value in explaining to route so success.
2. most fundamental assumption of the Blue Ocean theory is that industry’s conditions can be shaped by a firm’s efforts. The red ocean describes a situation where existing industry rules are readily formed, static and cannot be changed. While the possible occurrence of a blue ocean encourages the creativity and learning, the red ocean claims that learning is ineffective in such situation. The assumptions behind the two are therefore not coherent with each other, but also do not give an insightful explanation either, as a good theory should be. 3. The thought that industry conditions can be shaped is not new either. are based on the Schumpeterian view that business strategies should be entrepreneurial and creative and should follow a strategy that breaks the market and industry rules. And because this assumption is not new, it creates little insights to the development in this research area. The Blue Ocean theory therefore does not