The “Blue Ocean” approach is a strategic tool that helps innovation strategists’ asses current and desired future strategic states whereas..Red Ocean is a current state.

1. Blue Ocean
Strategy
&
Red Ocean
Strategy
1Prof. (Dr.) Nitin Zaware
Prof. (Dr.) Nitin Zaware

2. Blue Ocean Strategy
The “Blue Ocean” approach is a strategic tool
that helps innovation strategists’ asses
current and desired future strategic states
whereas..Red Ocean is a current state.
A business model describes the rationale of
how an organization creates, delivers, and
captures value (economic, social, cultural, or
other forms of value).
2Prof. (Dr.) Nitin Zaware

3. The process of business model construction is part
of business strategy.
The business model concentrates on value
creation. It describes a company or organization's
core strategy to generate economic value, normally
in the form of revenue.
The sustainability of a business is always defined
by future events, and the future is always
uncertain. The future presents both risks and
opportunities.
3Prof. (Dr.) Nitin Zaware

4. Blue Ocean Strategy
"Blue ocean strategy generally refers to the creation by
a company of a new, uncontested market space that
makes competitors irrelevant and that creates new
consumer value often while decreasing cost”.
BOS is all about minimizing risks due to competition
threat and maximizing opportunities by exploring
new boundaries.
Formulating and executing Blue Ocean Strategy have
their own principles that define and separate blue
ocean strategy from competition-based strategic
thought.
Blue ocean strategy is about gaps rowing demand.
4Prof. (Dr.) Nitin Zaware

5. Blue Ocean Strategy-Meaning:
Blue ocean strategy means, the market where
market boundaries and industry structure can
be reconstruct by the actions and beliefs of
industry players.
The structure and market boundaries exist
only in managers’ minds; practitioners who
hold this view do not let existing market
structures limit their thinking. To them, extra
demand is out there, largely untapped.
5Prof. (Dr.) Nitin Zaware

6. Characteristics of Blue Ocean Strategy
6Prof. (Dr.) Nitin Zaware

7. Characteristics of Blue Ocean Strategy
1) Non Existent Industries:
In a Blue Ocean Strategy one tends to see a creation of a
whole new industry as you innovate and create products and
services that are highly unique and unseen. Blue Ocean
Strategy denotes all the industries not in existence till today.
2) Undefined Market Space:
The market space in blue ocean strategy is unknown as it has
been uncontested and is to be created and developed. The
producer has a slight idea about its returns, but is completely
oblivious of its potential, scope, and span of coverage.
3) Undefined Industry Boundaries:
Again even the Industries boundaries are undefined as these
will be new industries and would mean that the scope of the
industries can be as large as one's imagination, creativity,
and potential.
7Prof. (Dr.) Nitin Zaware

8. Characteristics of Blue Ocean Strategy:
4) Unknown Competitive Rules:
The rules of the market are not defined, the policies
governing the industries are not even developed, the scope
of the market, industry is just stipulated and the competition
is almost negligible.
5) High Profit & Growth Opportunity:
Clearly when there is no risk of an immediate competitor on
the product, the industry thus formed by the producer is in
every sense skewed and inclined towards the producer.
6) Value Innovation:
Blue Ocean Strategy works on the principle of value
innovation which means that it radically looks only towards
an innovative idea to create new or an improved product
which is far better than its counterparts. 8Prof. (Dr.) Nitin Zaware

9. Characteristics of Blue Ocean Strategy:
7) Innovation & Creativity:
Innovation and Creativity are the essentials in this strategy
as the producer's only aim is to develop an innovative and
an efficient product that either out performs existing
products far behind technologically or it is something
never thought of and unheard to everybody.
8) Create a Market:
The benefit of going solo as an innovator is that you create
the market for yourself, examining the need of the
customer and segmenting the consumer pool. You can also
installed utility of the product which makes it equally
possible to be consumed by another segment of the
market.
9Prof. (Dr.) Nitin Zaware

10. Characteristics of Blue Ocean Strategy:
9) Developing Future Demand:
When the first press conference was conducted by Steve
Jobs for I Phone, he didn't show case his product, but
instead he built a relationship with the customers in his very
presentation. He got their attention and he immediately
made a blow by tempting them to buy the product.
10) Focus on Creating Future Customers:
It's not just about creating customers, but instead building a
pool of high loyal customers who would look up to the
brand as their own and idealize their every new product.
10Prof. (Dr.) Nitin Zaware

11. Principles of Blue Ocean Strategy:
11Prof. (Dr.) Nitin Zaware

12. Principles of Blue Ocean Strategy:
1) Reconstruct Market Boundaries:
This principle identifies the paths by which managers can
systematically create uncontested market space across diverse
industry domains, hence attenuating search risk.
2) Focus on the Big Picture, not the Numbers:
This principle, which addresses planning risk, presents an
alternative to the existing strategic planning process, which is
often criticized as a number-crunching exercise that keeps
companies locked into making incremental improvements.
3) Reach beyond Existing Demand:
To create the greatest market of new demand, managers must
challenge the conventional practice of aiming for finer
segmentation to better meet existing customer preferences,
which often results increasingly small target markets.
12Prof. (Dr.) Nitin Zaware

13. Principles of Blue Ocean Strategy:
4) Get the Strategic Sequence Right:
The fourth principle describes a sequence that companies
should follow to ensure that the business model they build
will be able to produce and maintain profitable growth.
5) Overcome Key Organizational Hurdles:
Tipping point leadership shows managers how to mobilize an
organization to overcome the key organizational hurdles that
block the implementation of a blue ocean strategy.
6) Build Execution into Strategy:
fair process to address the management risk associated with
people’s attitudes and behaviors. Because a blue ocean
strategy represents a departure from the status quo, fair
process is required to facilitate both strategy making and
execution by mobilizing people for the voluntary cooperation
needed for execution. 13Prof. (Dr.) Nitin Zaware

14. Red Ocean Strategy:
The Red Ocean Strategies suggest that there is no way that a
corporation can achieve both kinds of competitive
advantages. The Red Ocean companies try to outperform
their rivals to grab a greater share of existing demand.
Meaning:
Red Ocean Strategy is a head-to-head battle where the players
of a particular segment compete with each other remaining in
the same market space i.e. within the boundaries of the same
industry on the principle of ‘competitive advantage.
Definition:
"Red oceans represent all the industries in existence today the
known market space. In the red oceans, industry boundaries
are defined and accepted, and the competitive rules of the
game are known".
14Prof. (Dr.) Nitin Zaware

15. Characteristics of Red Ocean Strategy:
15Prof. (Dr.) Nitin Zaware

16. Characteristics of Red Ocean Strategy:
1) Existing Industries:
Red Ocean strategy talks about existing, current industries and
product or service segment. The producer or the company
doesn't go away from its existing Industry and conduct
business as competitive with its other competitors within the
industry.
2) Defined Market Space:
Market space is space within which any producer conducts
business and is able to sell its produce to the possible buyers.
In this form of strategy the market space is known as it has
existed since the inception of the industry.
3) Defined Industry Boundaries:
The boundaries around which the Industries scope and span
revolves around is limited and very much defined and well
accepted by the producer and his/her counterparts boundaries
are defined and accepted. 16Prof. (Dr.) Nitin Zaware

17. Characteristics of Red Ocean Strategy:
4) Known Competitive Rules:
Competitive rules are known and defined, the policies on
which the industry is governed is updated and modernized to
its capacity of ensuring better and healthy environment within
the industry.
5) Low Profit Growth Opportunity:
Fairly having a divided form of market share only ensures a low
profit and growth opportunities as each producer is capable of
sustaining while providing differentiated and higher quality
product.
6) Competitive Advantage:
The market on a Red Ocean Strategy works on the principle of
competitive advantage where, due to a higher technology or
supply of cheaper raw material or marginally higher product
quality or better logistics can be seen as a competitive
advantage. 17Prof. (Dr.) Nitin Zaware

18. Characteristics of Red Ocean Strategy:
7) Low Cost or Differentiation:
The best way to survive or sustain in such a market condition is
to either through a strategy of low cost if the producer has an
advantage on cost of production, raw material, labour, logistics
and warehousing.
8) Beat the Competition:
The company's only goal and outlook is to beat the competition
by hook or crook to render them a better margin of profit or
market share. Thus they put down every form of investment to
compete and fight for even a single percent market share.
9) Exploit Existing Demand:
Pricing decisions are made tactfully to not just cover the cost
incurred on production, but also to collect enough profits
before their counterparts make a move to hamper their sales.
18Prof. (Dr.) Nitin Zaware

19. Characteristics of Red Ocean Strategy:
10) Focus on existing customers:
For any particular industry, market or economy of
scale, the buyers are limited on the basis
of gender, taste, preference, age, income etc. Thus
the available consumer pool in most
cases is mostly limited.
19Prof. (Dr.) Nitin Zaware

20. Difference between Red & Blue Ocean Strategies:
Basis Red Ocean Strategy Blue Ocean Strategy
Industries Red Oceans represent the
fiercely competitive arena
where most companies
compete
Blue oceans, denote all the
industries not in existence today-
the unknown market space,
untainted by competition.
Competition This strategy focus on the
competition within the existing
market space.
This strategy focuses on creation
of uncontested market space.
Approach Approach of red ocean strategy
is to beat the competition.
Approach of the red ocean strategy
is to make the competition
irrelevant
20Prof. (Dr.) Nitin Zaware

21. Difference between Red & Blue Ocean Strategies:
Demand
In Red Ocean strategy higher
weightage is given to exploit
existing demand.
In Blue Ocean strategy weightage
is given to develop future demand.
Goal
Goal of this strategy plan is to
make value-cost-trade-off
Goal of this strategy plan is to
brake the value-cost-trade-off.
Alignment of
System Align the whole system of a
firm’s activities with its
strategic choice of
differentiation or low cost
Align the whole system of a firm’s
activities in pursuit of
differentiation or low cost
21Prof. (Dr.) Nitin Zaware

22. Difference between Red & Blue Ocean Strategies:
Profit
Opportunity
Profit opportunity of using Red
Ocean Strategy is low.
Profit opportunity of using Blue
Ocean Strategy is High.
Customer
Focus
Red Ocean strategy focuses on
existing stream of customers.
Blue ocean strategy focuses on
creation of new customers.
System
Approach
In Red Ocean strategy system
approach is towards low cost
and differentiation
In Blue Ocean strategy system
approach is towards creativity and
innovation.
22Prof. (Dr.) Nitin Zaware

23. Tools and Frameworks in Blue and Red Ocean Strategy:
Tools and
Frameworks
The Strategy Canvas Action Framework
23Prof. (Dr.) Nitin Zaware

24. Tools and Frameworks in Blue and Red Ocean Strategy:
1) The Strategy Canvas:
The strategy canvass is a high level depiction of current and future strategic
position based on the key Blue Ocean principles; it helps strategists
examine value creation, value capture and opportunity.
Use of Axis in Strategy Canvas:
The strategic canvas is using two dimensions which are counted in two
axis’s. On the horizontal axis, there are shown all the factors by which the
market competes and spend resources, and on the vertical axis is shown the
level of supply that the buyers accept for every of the for mentioned factors.
Value Curves Strategy Canvas :
The factors ratting graphic presentation on the strategic canvas is called
Value Curve of a corporation, representing its strategic profile. The Value
Curve, is a part of the strategic canvas and it graphically percentages the
relative performance of the corporation compared with the competition
factors of its industry.
24Prof. (Dr.) Nitin Zaware

25. The Strategy Canvas:
Application in Red Ocean and Blue Ocean:
The strategic canvas is successively used to outline the
competitiveness field of the Red Ocean. In order for a
corporation, that functions in a Red Ocean, to get to a better
and more profitable path, it has to do more that copying its
competitors and constantly compete with them Such a strategy
may raise the sells in short term, but it will have few chances to
provide an in despicable market share
Basic Purpose:
a) To capture the current state of play in the known market
space, which allows users to clearly see the factors that the
industry competes on and where the competition currently
invests.
b) To propel users to action by reorienting focus from
competitors to alternatives and from customers to
noncustomers of the industry 25Prof. (Dr.) Nitin Zaware

26. 2) The Four Forces/Action Framework:
The four forces frame is used to redefine the elements that add value to the
customers by creating a new value curve, as it is shown to the following diagram.
26Prof. (Dr.) Nitin Zaware

27. The Four Forces/Action Framework:
a) Elimination:
The first question, suggests that a corporation should find
out how to eliminate those factors that the corporations
are competing for, in the industry. Usually, those factors
are taken for granted, even if they don't add value anymore
or even take away value.
b) Reduction:
The second question, urges the company to defy whether
its products and services have been overdeveloped in their
struggle to reach and exceed the competition. Some
corporations offer way too many services to their
customers, which multiply their costs without offering real
value to them.
27Prof. (Dr.) Nitin Zaware

28. The Four Forces/Action Framework:
c) Raise:
The third question, urges the corporation to discover and
eliminate those compromises that the industry makes the
customers to do.
d) Creation:
The fourth question, helps the corporations to discover hole new
sources of value for it’s customers, to create new demand and to
change the pricing strategy of the industry.
If a corporation follows the first two questions, that suggest the
elimination and the decrease of some factors, it can succeed on
decreasing its costs comparing with its competitors. On the other
hand, the next two questions, suggest the creation and increase of
some factors, which will increase the market value of the
corporation’s product, and create new demand.
28Prof. (Dr.) Nitin Zaware