Blue Ocean Strategy
August 11, 2014
Blue Ocean Strategy
The Blue Ocean Strategy is a slang term for the uncontested market space for an unknown industry or innovation (Investopedia, 2014). Take the circus industry, for example, its appeal is in rapid decline as technology becomes more interesting than seeing chained animals perform. When the circus first came out, it was the 1700 where no one had ever seen performances of its kind. Now the traditional circus’s audiences are in decline, but the increase of unwanted attention, such as animal rights activists, remains. In 1984, former circus performer Guy Laliberte and a group of other street performers founded Cirque du Soleil, which takes the circus industry to all new heights (Kim & Mauborgne, 2004). Cirque du Soleil is a different take on the traditional circus without animals. It takes the circus industry to a whole new level increasing the interest of adults rather than focusing more on children with their breathtaking acrobatics without completely competing with circuses such as Ringling Brothers and Barnum & Baileys. This is the Blue Ocean Strategy. The importance of the blue ocean strategy is significant to those businesses who want to stand out above the rest in its industry. Apple has a plethora of products to choose from like computers (desktops and laptops), cell phones, and tablets, which other companies have but Apple stands out above those ‘like’ businesses with their distribution of music via iTunes. Apple’s iTunes are the only digital music distributor; well it may as well be because nothing else can compare although some businesses like Amazon try. If you think about, to access successful and complete songs, albums, etc., iTunes is the place to go. Netflix is another example of Blue Ocean. Netflix streams many movies, TV shows, and documentaries without a real competitor. It is a cheap and easily accessible business that was the first to compete with Blockbuster Video, but introduced video rentals via internet. Netflix even has its own button and service on the new Smart TV (which is an excellent feature). Sure there are other companies trying to compete with Netflix in video streaming like Amazon (who also has its own button on the Smart TV), but cannot compare in pricing. Although Amazon has the access to the most recent movies and shows, customers have to purchase the videos rather than just renting at a low monthly rate. Red oceans refer to the known market space – all industries in existence today. In red oceans, industry boundaries are clearly delineated and accepted, and the competitive rules of the game are known (Red Oceans, 2014). An example of a red ocean business would be Blockbuster Video. Blockbuster was around for a long time renting VHS tapes to customers, then updating to DVDs. However, Blockbuster was starting to rent their movies through the Internet after Netflix came out, trying to keep their business relevant. Netflix became too popular with many options to choose from at a low monthly cost. Sure customers could also rent videos and have them sent via mail with Netflix and an extra fee, but having videos sent through mail became less appealing (even with no late fees). Nintendo had the privilege to be ‘blue ocean’ twice then change ocean colors to red. In the 80s, Nintendo came out with its original game system that blue Atari out of the water. It was amazing and nothing could compare. However, other business started producing their own game systems (Playstation, Xbox, Sega). With the graphics of these systems becoming more and more lifelike, Nintendo could no longer compete (even with its 64, GameCube, and Super Nintendo). Fast forward a decade or so later and Nintendo came out with a game system that only worked when the gamer moved making the gameplay more lifelike. However, a few years after the Wii was introduced, Xbox came out with the 360 and Playstation came out with Move...
References: Blue ocean. (2014). Retrieved from http://www.investopedia.com/terms/b/blue-ocean.asp
Kim, W.C. & Mauborgne, R. (2004). Blue ocean strategy. Harvard Business Review. Retrieved from http://hbr.org/2004/10/blue-ocean-strategy/ar/1
Red oceans. 2014. Blue Ocean Strategy. Retrieved from http://www.blueoceanstrategy.com/concepts/glossary/glossary-red-oceans/
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