Blue Ocean Strategy Theory and Criticism
Outline the main components of Kim and Mauborgne’s (2004) concept of ‘Blue Ocean Strategy’. Critically assess the strengths and limitations of this approach to pursuing competitive advantage. Use relevant examples to support your argument.
Introduction
In the contemporary hostile business environment, innovation has become part of any company’s paramount strategy for continuous survival. Nokia, despite being the world’s largest mobile phone manufacturer having a large customer base, realized how lack of innovation to compete against rivals high end smart phones threatened its market presence. Kim and Mauborgne’s (2004) Blue Ocean Strategy is one of the major contributions in that context. Accordingly, this essay examines the Blue Ocean Strategy concept in the following order: First, the theory is explained with a real-life example. Secondly we look at few of its limitations. Thirdly, a critical appraisal of why this approach is better or worse off than other competing and value innovation theories is presented and finally the conclusion is drawn.
Blue Ocean Strategy Theory
According to Kim and Mauborgne (2004) the business universe consists of two distinct kinds of space: Red and Blue Oceans.
Red Oceans are the known market space where industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of the market. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the ocean bloody and hence, the term red ocean.
Blue oceans, in contrast, refer to all the industries not in existence today—the unknown market space, untainted by competition. The essence of Blue Oceans is value innovation where demand is created rather than fought over. There is ample opportunity for rapid growth and profits. In Blue Ocean, competition is irrelevant because the rules of the game are
Introduction
In the contemporary hostile business environment, innovation has become part of any company’s paramount strategy for continuous survival. Nokia, despite being the world’s largest mobile phone manufacturer having a large customer base, realized how lack of innovation to compete against rivals high end smart phones threatened its market presence. Kim and Mauborgne’s (2004) Blue Ocean Strategy is one of the major contributions in that context. Accordingly, this essay examines the Blue Ocean Strategy concept in the following order: First, the theory is explained with a real-life example. Secondly we look at few of its limitations. Thirdly, a critical appraisal of why this approach is better or worse off than other competing and value innovation theories is presented and finally the conclusion is drawn.
Blue Ocean Strategy Theory
According to Kim and Mauborgne (2004) the business universe consists of two distinct kinds of space: Red and Blue Oceans.
Red Oceans are the known market space where industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of the market. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the ocean bloody and hence, the term red ocean.
Blue oceans, in contrast, refer to all the industries not in existence today—the unknown market space, untainted by competition. The essence of Blue Oceans is value innovation where demand is created rather than fought over. There is ample opportunity for rapid growth and profits. In Blue Ocean, competition is irrelevant because the rules of the game are