BLUE OCEAN STRATEGY
• Business strategy focuses on creating rather than
competing.
• Emphasis on finding and developing uncontested
markets (blue oceans).
• Blue oceans are newly created markets or segments
with no close competitors.
• Effective blue ocean strategies combine high product
differentiation and low cost.
• Red oceans refer to highly contested markets.
• Goal is to make competition irrelevant rather than
beating them.
Reference Book: Cambridge international AS and A level Business Studies by Malcolm Surridge and Andrew Gillespie
Instructor : Osama Abdullah Nagda
Contact # 03343341737
FOUR ACTIONS FRAMEWORK
To help identify a blue ocean, Kim and Mauborgne recommend that businesses consider
what they call the Four Actions Framework.The framework asks four important questions:
• Raise: What factors, such as quality or customer service, could be raised above the
industry’s standard?
• Reduce: What factors, such as costly competitive advertising, were a result of competing
against other businesses, and which of these can be reduced?
• Eliminate: Which factors that the business has used to compete against rivals could be
eliminated altogether?
• Create :Which factors should be created that the industry has never offered before?
Reference Book: Cambridge international AS and A level Business Studies by Malcolm Surridge and Andrew Gillespie
Instructor : Osama Abdullah Nagda
Contact # 03343341737
DIFFERENCES BETWEEN RED OCEAN AND BLUE OCEAN STRATEGIES
Reference Book: Cambridge international AS and A level Business Studies by Malcolm Surridge and Andrew Gillespie
Instructor : Osama Abdullah Nagda
Contact # 03343341737
BLUE OCEAN STRATEGIES
What do Amazon, Alibaba and Air Asia have in common? They have all achieved success
through adopting a blue ocean strategy. They all claim to offer excellent customer service.
The rapid sales growth of all three businesses suggests that customers are satisfied and
loyal. They all offer both good value and low cost to customers, which is a key component
of a blue ocean strategy. When the businesses were first set up, they avoided competition by
being creative in what they offered. They attracted customers with original services that, at
least when they first set up, had no direct competitors.
All three businesses have also experienced new rivals setting up in the blue oceans they
established. These competitors have largely failed. The scale cost advantages that Amazon,
Alibaba and Air Asia now have make it very difficult for new entrants into their markets to
succeed.
1.
Research one of these businesses and analyse the main reasons for its success.
2.
Evaluate a possible blue ocean strategy that a business in your country might adopt