Posted: March 22nd, 2023

MBA Business Strategy: Blue Ocean Strategy

Businesses operate in highly competitive environments, creating the need to strategize and develop a plan that will give them an edge over rivals. The blue ocean strategy is an example of such techniques that allow companies to operate without competition. The method renders competition irrelevant. The strategy is a simultaneous pursuit of differentiation and low cost for businesses to remain relevant in the market. Companies seeking success in the modern competitive environment implement the system by opening new markets and creating new demand (Blue Ocean Strategy). The process involves creating and capturing uncontested spaces in the market, rendering the rivalry irrelevant. Achieving the goal is not always easy and involves considerable innovation and creativity. While the strategy is founded on the presumption that market borders and industry structures are flexible and that a company can construct relevant operations, the industry players use their beliefs and actions to create new boundaries and industry structures. 

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One of the ways to understand the blue ocean strategy comprehensively is to compare it with the red ocean strategy. The table below shows a comparison of the two strategies:


Red ocean strategy

Blue ocean strategy
  1. The business competes in the current market space
  2. The business strives to beat the competition
  3. The companies take advantage of the existing demand
  4. The business using the strategy ensures a value-cost trade-off
  5. The whole system of a firm’s activities is aligned with the differentiation or low-cost choices.
  1. The businesses strive to create an uncontested market
  2. The company strives to render the competition irrelevant
  3.  The business enjoys a chance to create new demand.
  4. The company using the strategy disrupts the value-cost trade-off
  5. The company enjoys an alignment of its systems to get differentiation and low-cost advantages.  

Additional analysis shows that a blue ocean strategy differs from a red ocean strategy in the market space. For instance, the red ocean simply suggests all today’s industries. The market spaces are highly competitive, and new and existing companies seek to create means to survive and rival the current competitors. Companies operating in a red ocean strategy use clear and acceptable industry structures and market boundaries. They already understand the competitive rules of the game and know how to play by them (Blue Ocean Strategy Presentation). Thus, the companies strive to rival their competitors and capture much space and existing demand. The market space gets crowded, reducing growth opportunities and profitability. Overall, they are called red oceans because products become commodities during intense rivalry, causing “bloody” competition.

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Red oceans differ from blue oceans, which are the market spaces and industries that are in today. They are the unknown market spaces that are devoid of competition. Instead of fighting for a demand like in red oceans, in the blue ocean, companies create demand (Blue Ocean Strategy PowerPoint Templates). They have an opportunity to grow and increase their profits. The market space does not have any rules by which the company will operate. They are wide and expansive markets with a potential for exploration. Blue oceans are what many businesses seek to remain profitable and continue growing.

While companies are interested in finding their blue ocean to grow and become profitable, managers should understand that the process is not for the fainthearted. For instance, the process involves identifying unexplored markets and creating strategies to succeed in them. They require considerable analysis to identify the market potential. However, when done, the rewards from such markets are great. Running a business without competition should be a source of motivation for companies that adopt the blue ocean strategy. Overall, the company will be at the forefront and pocket considerably high profits.

The blue ocean strategy is not about dividing the market into two parts. The process is about the efforts by individuals or organizations to create new frontiers of opportunities. It is about creating new market growth and jobs. The focus shifts from fighting for a more significant part of the current market but creating that space solely for the business. According to Denning, a successful blue ocean strategy has three components: mindset, tools, and human-ness. The authors realized that the success of the blue ocean strategy is founded on a shift in mindset. The model involves the expansion of mental horizons and creatively thinking about where the opportunities are. With changes in the frames of mind, a business can identify and explore new opportunities. Tools are necessary to implement a blue ocean strategy effectively. Successful strategy implementation takes practical tools to change the blue ocean idea into a successful business venture. After all, not all ideas can be translated into business success. Intermittent, one-off “Blue Ocean strategy” differs from a systematically adopted business. In terms of human-ness, successful strategy implementation requires a humanistic move in which people are inspired to own and drive the change confidently.

The implementation of a blue ocean strategy requires managers to follow a five-step process. The steps show how some companies have implemented their blue ocean strategies when many are stuck in the highly competitive red oceans.

The first step is selecting the right place to begin and creating the right team to support its implementation. The right team plays a key role in creating the right structures and tools for the implementation.

The second step is clearly understanding the current state of affairs. Thus, to understand where the business plans to focus, it is essential to understand the current state.

At the third step, the company should uncover hidden challenges that limit the current industry’s size and uncover untapped clients. The knowledge will help the company to create and take advantage of the new demand.

The fourth step is systematically reconstructing market boundaries. When the boundaries are limitless, it becomes possible for companies to develop alternative opportunities for growth and profitability.

The fifth step is choosing the correct move when exploring the blue ocean. Rapid market tests, finalizing, and launching the change are necessary. The business should be prepared for the change and its implementation.

The final step is developing the capacity to move from operating in the current market (the red ocean). Companies that succeed in the blue ocean should not be “settlers” but be prepared for more remarkable value improvement. Hence, they should also be prepared to create new value for consumers through market innovation.

Overall, a blue ocean strategy is a shift away from the current highly competitive market to explore new and untapped markets. In such markets, opportunities are unlimited. Companies in the blue ocean have unlimited opportunities for growth and profitability.


Works Cited

Blue Ocean Strategy PowerPoint Templates, 2018. Accessed 13 Oct. 2021.

Denning, Steve. Moving to blue ocean strategy: A five-step process to make the shift, 2017. Accessed 13 Oct. 2021.

Blue Ocean Strategy Presentation. Accessed 13 Oct. 2021.

Blue Ocean Strategy, 2016. Accessed 13 Oct. 2021.


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