Blue Ocean versus Red Ocean Strategies

Blue Ocean versus Red Ocean Strategies

For the past five decades, competition was in the heart of any corporate strategy. Not only the positions of different managerial positions' naming-chief executive officer, headquarters and other military connotations-strengthen that sense, but reflects the real situation on how business management think, strategize, or envision their intervention to be able to sustain their business in highly competitive environment. In such situations, good analysis of the economic structure, that might include supply/demand ratio and the availability of resources, might generate profit for some, which are active within a specific industry, over others. But still, profit margins have limits as all would be competing on a definite demand scale. The form of strategizing within a definite economic structure, dictated by demand and availability of resources, is termed Red Ocean Strategy. As described by Kim and Mauborgne(1), Red Ocean represents all of the existing industries in a market place.

On the same note and in the past decades, the growth of the communication sector and the number of players in a market arena limited profit and at the same time facilitated the emergence of new industries that created new demand rather than served an existing one. Hence Blue Ocean describes all of the markets that do not exist, whereby the strategizing to create demand and rotate about competition for large and fast profit margins is termed Blue Ocean Strategy, according to Kim and Mauborgne. Blue Ocean Strategies are usually more risky than those developed for well known and definite markets. This is the major reason why despite the profitability margins of blue strategies, most of the world prefers to strive in a competitive yet known return to investment markets, hence contributing to the formation of a larger Red Ocean.

Though the Red and Blue Ocean Strategies seem offer two different disciplines of strategizing, they are very interrelated and would constantly feed one another. That is, most of the times, it is the Red Ocean bloody competitiveness is what favors or drive entrepreneurs to foresee and create new and profitable markets. At the same time, new markets, which directly contribute to the Blue Ocean, would draw the attention of investors that want to benefit from the tested and uncovered assumptions and hence would soon turn the blue into red.