Blue ocean strategies

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What's a red ocean? -the rivalries we understand in known industries -You accept key constraints that define your industry → boundaries are defined and accepted, competitive rules are understood What is a blue ocean? -Doing business where there is no competitor-- finding your own space; demand is created rather than fought over. -You don't accept that it is difficult to create new market space. How is a blue ocean created? (2 ways) -New industry (eBay and online auction) -Created from within a red ocean by altering boundaries (Cirque) How does the Blue Ocean differ from Porter’s “generic strategies”? -May have some overlap with certain aspects of 'focus' strategies -Walmart's emergence in rural areas, same with Gateway at the time (geographically defined blue oceans) -Rejects the emphasis on 'competitive advantage' and more specifically that there is a trade-off between the 'value and cost (of providing value)' -Instead of responding to the 5 forces- there is a redefinition of what the 5 forces are. • -Cirque case: they redefined the perceptual concept of a 'circus'- huge animals didn't necessarily need to be carted around • -Sopranos: redefined the perceptual concept of a 'mafia- took the familiar traits of the mob and added vulnerability- expanded this audience • -Pixar: redefined how child's stories are told- expanded this audience (reduced costs via technology exploitation while understanding the story-telling styles that matter. What is Blue Ocean Strategy? • Does not come from Technology-innovations → linking technology to what buyers valued • Incumbents create Blue Oceans within their red oceans • Focus on strategic moves, not industry/firm level of analysis. • Blue oceans are what creates brands Blue Ocean Process 1. Simultaneous value enhancement with (operating) cost reduction 2. This

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