Summary the artical Essay Example | Topics and Well Written Essays - 500 words

Summary the artical - Essay Example Blue oceans consist of all those industries that create new demand and market or expand the boundaries of the existing demand and market. By doing so, they generate new opportunities for profit and growth. Blue oceans have been a source of growth in the past and will remain so in the future. Emergence of new industries and wide products differentiation in the existing ones in the past demonstrate this phenomenon. As globalization spreads and barriers fall further, red oceans will increasingly become competitive with more products standardized resulting in price wars and reduced profitability. Only blue oceans will ensure growth and profit in the future. However, paradoxically, there is a bias in favor of red oceans. A study found that, out of 108 new ventures, 86 percent pursued red oceans strategy contributing to 62 percent of revenue and 39 percent of profit. Only the remaining 14 percent new ventures followed blue ocean strategy but they contributed 38 percent of revenue and 61 percent of total profit. Blue oceans have four defining features, as identified based on the data of 100 years in auto, computer, and movie and theater sectors. First, firms might create blue oceans through technological innovation in some cases but they tweak the existing technology to new uses in most cases. Second, existing firms often create blue oceans within their core competency areas rather than stepping out to new frontiers. Third, the most appropriate unit of analysis is not a firm or industry but the strategic move involving managerial actions and decisions to tap the blue oceans of demand and market. Fourth, creation of blue oceans builds new brands. Strategic orientation is more important than large R & D budget to create new market space. Red ocean strategy and blue ocean strategy have their own characteristics. In red ocean strategy, firms compete in the existing market space, beat the competition, exploit the existing demand, make a trade-off