Blue Ocean Strategy
* How did Cirque profitably increase revenues by a factor of 22 over the last 10 years in an unattractive environment? * Tagline/branding “we reinvent the circus” – new meaning of entertainment * Eradicated the competition: pulled in a new kind of customers who were never customers of this industry = adults and corporate clients of opera, ballet = paying more for a ticket * Two kinds of business/market space:
1. Red Ocean: existent industries (increasing competition turns water bloody) * defined and accepted boundaries
* the competitive rules of the game are well understood * companies try to outperform their rivals to grab a greater share of existing demand * as space grows and becomes more crowded, the prospects of profit and growth reduce * products turn into commodities
2. Blue Ocean: not existent industries = unknown market space and untainted by competition * Demand is created rather than fought over.
* Ample opportunity for growth = profitable and rapid * Example: eBay = new online auction industry
* Two ways to create blue oceans (HE SAYS THAT IN THE ARTICLE THEN NEVER STATES THEM CLEARLY!) : * Blue Ocean is created from within a Red Ocean by altering the boundaries of an existing industry. * Blue Ocean is created from within a Red Ocean by altering the boundaries of an existing industry. * Traditional models focused on competing in existing market space. (managers’ failure to realize the differences between red and blue ocean strategy lies behind the difficulties many companies encounter as they try to break from the competition) * Blue Ocean industries that emerged the past 30 years: mutual funds, cellular telephones, biotechnology, discount retailing, express package delivery, snowboards, coffee bars, and home videos.. * There’s a huge potential to...
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