1. What is a blue ocean strategy? What is a red ocean strategy? Explain these from the perspective of company, competition, costs, and markets.
Blue ocean strategy, as a business method, is about company creating a new market or industry where there is no competitor. Companies play not by traditional rules, never use the competition as a benchmark. They could ether create greater value for customers at a higher cost or create reasonable value at a lower cost. Thus, the name of the program – find a blue ocean, a new ocean to swim in.
Red ocean strategy, as a business method be opposite to blue ocean strategy, is a head to head battle where the players of a particular segment …show more content…
5. Explain the redefined relationship between “value” and “low cost” in blue ocean strategies. What is the traditional basis of “competitive advantage” in red ocean strategies?
Value Innovation, the simultaneous pursuit of differentiation and low cost, is the cornerstone of blue ocean strategy. Value innovation focuses on making the competition irrelevant by creating a leap of value for buyers and for the company, thereby opening up new and uncontested market space. Because value to buyers comes from the offering’s utility minus its price, and because value to the company is generated from the offering’s price minus its cost, value innovation is achieved only when the whole system of utility, price and cost is aligned.
In Red Ocean, the competition rules are already exited. Those companies in Red Ocean try to perform better to get more shares in market. So, competition is the theme of Red Ocean. If companies want to get competitive advantage in Red Ocean, the bases are 1. Compete in existing market space, 2. Beat the completion, 3. Exploit existing demand, 4. Make the value-cost trade-off, 5. Align the whole system of a firm’s activities with its strategic choice of