1. Chapter One: Creating Blue Oceans
Blue Ocean Strategy
Chapter One: Creating Blue Oceans

2. New Market Space Red oceans and blue oceans make up market universe
Red oceans: all industries in existence= known market space
Blue oceans: all industries not in existence= unknown market space

3. Red Oceans vs. Blue Oceans
Industry boundaries defined and accepted
Competitive rules of game known
Companies try to outperform rivals; cutthroat competition
As market space gets crowded, prospects for profit and growth reduced
Products become commodities
Red ocean strategy is a market-competing strategy
Blue oceans
Undefined market space, demand creation, opportunity for highly profitable growth
Most are created from within red oceans by expanding existing industry boundaries
Rules of game waiting to be set
Competition irrelevant
Blue ocean strategy is a market-creating strategy

4. The Rising Imperative of Creating Blue Oceans
Supply is exceeding demand in most industries
global competition is intensifying
Problems:
Accelerated commodization of products and services
Increasing price wars
Shrinking profit margins
Red oceans becoming bloodier, need to be concerned with creating blue oceans

5. The Continuing Creation of Blue Oceans
Blue oceans have been around for some time; a feature of business life
Industries never stand still, constantly evolving
Significant expansion of blue oceans over years
So why the focus on red ocean strategy?
Corporate strategy influenced by military strategy
Need to create new market space that is uncontested

6. The Impact of Creating Blue Oceans

7. From Company and Industry to Strategic Move
Are there lasting visionary companies that continuously outperform the market and create blue oceans?
Found success of these model companies was a result of industry sector performance, not companies themselves
Strategic move used as unit of analysis (rather than company or industry)
Strategic move: the set of managerial actions and decisions involved in making a major market-creating business offering

8. Value Innovation: The Cornerstone of Blue Ocean Strategy
Creators of blue oceans follow value innovation
Value Innovation
Equal emphasis on value and innovation
Defies value-cost trade-off of competition-based strategy
Successful value innovation:
Drives down costs while driving up buyers’ value
Uses a whole-system approach
Follows reconstructionist view

9. Red Ocean Vs. Blue Ocean Strategy
Create uncontested market space
Make the competition irrelevant
Create and capture new demand
Break the value-cost trade-off
Align the whole system of a firm’s activities in pursuit of differentiation and low cost
Compete in existing market space
Beat the competition
Exploit existing demand
Make the value-cost trade-off
Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost

10. Formulating and Executing Blue Ocean Strategy
Six Principles of Blue Ocean Strategy
Reconstruct market boundaries
Focus on the big picture, not the numbers
Reach beyond existing demand
Get the strategic sequence right
Overcome key organizational hurtles
Build execution into strategy
The following chapters will give you the principles and analytic frameworks to succeed in blue oceans

11. Take Aways
Red ocean strategy is a market-competing strategy, while blue ocean strategy is a market- creating strategy
As red oceans are becoming bloodier, we need to create more blue oceans
“The only way to beat the competition is to stop trying to beat the competition!”