1. Blue Ocean Strategy
Special Report by: Rocky Gabatin
SPENTREP – S09

2. Blue Ocean Strategy
Salient Points
“Competing in
overcrowded industries is
no way to sustain high
performance.”
There should be a
creation of “uncontested
market space”—a “Blue
Ocean.”

3. Blue Ocean Strategy
Salient Points
Cirque du Soleil vs.
Ringling Bros.
Circus companies
Cirque “reinvents the
circus,” making the
market competition
irrelevant.
Cirque pulled in “noncustomers” of the
industry
E.g. adults and corporate
clients
Cirque took off from the
“Red Ocean.”

4. Blue Ocean Strategy
Red Ocean
Represents the industries in
existence.
It is the “known market space.”
Industry boundaries are defined and
accepted
Competition is well understood by
players
Outperform the rivals to gain bigger
market share
Blue Ocean
The “unknown market space.”
Untapped, untainted by
competition.
Demand for a product is
created rather than fought
over by players in the industry.

5. Blue Ocean Strategy
Red Ocean
Compete in existing market
space
Defeat competitors
Fight over existing demand
Make the value-cost trade-off
Align the whole system of a
firm’s activities with its strategic
choice of differentiation or low
cost
Blue Ocean
Create uncontested market
space
Make the competition irrelevant
Create and capture new demand
Break the value-cost trade-off
Align the whole system of firm’s
activities in pursuit of
differentiation and low cost

6. Blue Oceans

7. Effects of Blue
Oceans
• Rapid commoditization of
goods and services
• Price wars
• Differentiating brands
become harder

8. Towards Blue Ocean Strategy
Blue oceans are not about technology innovation.
While technology is involved in creating blue oceans,
they can be created using existing technology.
E.g. Ford’s assembly line resembles that of a meat-packing
company.
E.g. Computers are simplified and/or minimized.

9. Towards Blue Ocean Strategy
Incumbents often create blue oceans – and usually
within their core businesses.
Blue oceans are created within, not beyond, red oceans
of existing industries.
Blue oceans are just right next to you.
E.g. IBM and Compaq, AMC.

10. Towards Blue Ocean Strategy
Company and industry are the wrong units of
analysis.
There is no perpetually excellent industry.
Relative attractiveness is driven largely by the creation
of blue oceans from within them.

11. Towards Blue Ocean Strategy
Creating blue oceans builds brands.
Companies are remembered because of the blue oceans
they created, and this transcends time.
E.g. Ford is still a well-known brand today.

12. Reference:
Kim, W. C. & Mauborgne, R. (2004). Blue Ocean
Strategy. Harvard Business Review, Oct. 2004.
Harvard Press