Blue Ocean vs Red Ocean

Blue Ocean

- Create uncontested market space

- Make the competition irrelevant

- Create and capture a new demand

- Break the value/cost tradeoff

- Align the whole system of a company's activities in pursuit of differentiation and low cost.

Red Ocean

- Compete in existing market space

- Beat the competition

- Exploit exisiting demand

- Make the value/cost traeoff

- Align the company's acitivities with its strategic choice of differentitation or low cost.

Blue Ocean

- It can build brands

- A blue Ocean strategic move can create brand equity that lasts for decades.

- The creators of Blue Ocean never use the competition as a benchmark. Instead, they make it irrelevant by creating a different

value for buyers and the company

- The Blue Ocean strategy rejects the fundamentals of principle conventional strategy.

Conventional Strategy

- It is a tradeoff that exists between value and cost. It means that the companies can create greater value for customers

at a higher cost or create reasonable value a lower cost.

- In blue oceans, successful companies simultaneously pursue differentiation and low cost.

Six paths framework to reshaping market boundaries:

1. Define indstury requirements and focus on being the best within them.

2. Look at the lens of generally accepted strategic groups (such as luxury automobiles, economy, cars, etc.) and strive to stand out.

3. Focus on the same buyer group, be it the purchaser, the user, or the influencer.

4. Define the scope of the products and services offered by the industry.

5. Accept the industry's functional or emotional orientation.

6. Focus on competitive threats and formulate strategy.

To break out Red Oceans, companies must reject the accepted boundaries defining their competition.

Instead of looking within these boundaries, managers must look systematically across to create Blue Oceans.

They need to look across alternatives industries, strategic groups, buyer groups, complementary products, and service

offerings, an industry-emotional orientation, and even time. It gives companies keen insight into how to

reconstruct market realities to develop Blue Oceans.

Strategy Canvas

- A graphically depicts a company's and its competitor's value proposition, suggest opportunities to escape/eliminate competition,

captures the current and future state of activity and documents current and future competitive investments. It captures the

current strategic landscape and the prospects for an organization.

Purposes of Strategy Canvas

- To caputures the current state of market space, which allows user to the factors that the industry competes on and where

the competition currently invests.

- To propel users to refocus from competitors to alternatives and from customer to non-customers of the industry.

ERRC

- Eliminate, Reduce, Raise, and Create.

- This is a simple matrix tool that drives companies to focus simultaneously on eliminating, reducing, raising, and creating

while unlocking a new Blue Ocean.

Future Value Curve

- Eliminate Questions (Which factors does the industry take for granted that should be eliminated?)

- Reduce Questions (Which factors should be reduced well below from the industry's standards?)

- Raising Questions (Which factors should be raised well above the industry's standards?)

- Creating Questions (Which factors should be create that has never created?)

ERRC Grid

- This is a tool for creating a Blue Oceans.

- It pushes companies to act on the question (4) actions framework to create new value curve (or strategic profile) essential

to unlocking a new Blue Ocean.

- The grid gives companies (4) immediate benefits:

- It pushes them to simultaneously pursue differentiation and low cost to break the value-cost tradeoff.

- It immediately flags companies focused only on raising, and creating, solving problems related to cost structure and

over-engineering products and services

- Managers easily understand it at any level, creating a higher degree of engagement in its application.

- It drives companies to thoroughly scrutinize every factor in the industry, helping them discover the implicit assumptions

they unconsciously make in competing within the market.