Blue Ocean Strategy

How to Create Uncontested Market Space and

Make the Competition Irrelevant

Book Review

In Partial Fulfillment
of the Requirements of the Subject

Globalized Marketing (ADM C009)

Submitted to:

Dr. Rhodora A. Ngolob

Submitted by:

Michael Karl M. Barnuevo

MBA 1

Blue Ocean Strategy

How to Create Uncontested Market Space and Make the Competition
Irrelevant
Authors: W. Chan Kim and Renee Mauborgne
Place of Publication:

Publisher:

Boston, Massachusetts

Harvard Business School Press

Date of Publication:

Number of Pages:

2005

238 pages

Introduction
Professor-Student W. Chan Kim and Renee Mauborgne have created a
critical

strategic

management

approach

for

the

bloody

global

competitive environment in their book, Blue Ocean Strategy: How to

Create Uncontested Market space and Make the Competition Irrelevant.
The book, which debuted in 2005, is good for companies who want to
compete globally. Discussing the four formulation principles and two
execution

principles,

Blue

Ocean

Strategy

teaches

the

reader

to

create uncontested market space and break away from bloody Red Ocean
environment by strategically moving into the area called the Blue
Ocean.
As the title says, Blue Ocean challenges companies to break out
the bloody competition also known as the Red Ocean by developing an
uncontested market space. Instead of competing with other companies
and sharing demand, Blue Ocean is a strategy that breaks away from
competition.

Summary
PART ONE: BLUE OCEAN STRATEGY
Creating Blue Ocean
The blue suggest that companies should avoid competing with one
another. They should innovate and improve their existing market to
cater to the future need of their customers. Companies need to study
and explore the unknown market space. This is the future market, the
future demand and the future industries. The bloody competition or the
book stated the red ocean becomes more fierce and hard to struggle
with; companies should be concern with blue oceans rather than red
oceans.

Red Ocean Vs. Blue Ocean strategy

Red ocean Strategy

Blue Ocean Strategy

Compete in the same market.

Create a separate and uncontested

There is fierce competition.

market space.
Separate the company from the red
ocean,

making

competition

Exploit existing demand

Make the value-cost trade-off
Align the whole system of a firms

irrelevant.
Create a new demand
Break the value-cost trade-off
Align the whole system of a firms

activities

activities

with

its

strategic

choice of differentiation or low

in

pursuit

differentiation and low cost.

cost.
Analytical Tools and Frameworks
In this chapter, the book discussed about the lay-out for the
basic analytical tools and frameworks that will be used throughout in
the formulation and execution of the blue ocean strategy is being
discussed. Minimizing risks is more effective rather than taking risks
when doing a blue ocean strategy.
The blue ocean strategy begins with changing the strategic focus
from competitors to alternatives, and from customers to noncustomers
of the industry. Companies should avoid the old habit of benchmarking

of

the

competitors

in

the

same

industry

and

choosing

between

differentiation and cost leadership.

The Four Actions Frameworks

REDUCE
Which factors
should be
reduces well
below the
ELIMINATE

CREATE

A NEW
VALUE
CURVE

Which of the
factors that
the industry
takes for

Which
factors
should be
created that

RAISE

PART TWO: FORMULATING BLUE OCEAN

Which factors
should be raised
well above the
industrys
STRATEGY

Reconstruction Market Boundaries

The chapter discussed on how to make the competition irrelevant
by considering the six conventional boundaries of competition to open
up

commercially

important

blue

oceans.

The

six

paths

are

looking

across alternative industries, across strategic groups, across buyer

groups, across complementary product and service offerings, across the
functional-emotional orientation of an industry, and across time.

From Head-to Head Competition to Blue Ocean Creation

industry
Strategic group

Buyer group
Scope
of
product
service offering

Functional-emotional
orientation

time

or

Head-to-Head competition
Focuses on rivals within
its industry
Focuses on competitive
position within
strategic group
Focuses on better
serving the buyer group
Focuses on maximizing
the value of product and
service offerings within
the bounds of its
industry
Focuses on improving
price performance within
the functional-emotional
orientation of its
industry
Focuses on adapting to
external trends as they
occur

Blue Ocean Creation

Looks across alternative
industries
Look across strategic
groups within industry
Redefine the industry
buyer group
Looks across to
complementary product
and service offering

Rethinks the functionalemotional orientation of

its industry

Participates in shaping
external trends
overtime.

Focus on the Big Picture, not the Numbers

The chapter discusses the means on how to devise the companys
strategic planning process to go beyond improvements to create value
innovations.
planning

It presents an alternative to the existing strategic

process

exercise

that

which
keeps

is

often

companies

criticized
locked

as

into

number-crunching

making

incremental

improvements.
Visual
Awakening

Visual
Exploration

Visual Strategy
Fair

Visual
Communication

Compare your
business with
your
competitors by
drawing your
as is
strategy
canvas.

Go into the
field to
explore the six
paths to
creating blue
oceans.

Draw your to
be strategy
canvas based on
insights from
field
observations.

Distribute your
before-and-after
strategic profiles
on one page for
easy comparison.

Observe the
distinctive
advantages of
alternative
products and
services.

Get feedback on
alternative
strategy
canvases from
customers,
competitors
customers, and
noncustomers.

See where your

strategy needs
to change

See which
factors you
should
eliminate,
create, or
change.

Support only those

projects and
operational moves
that allow your
company to close
the gaps to
actualize the new
strategy.

Use feedback to
build the best
to be future
strategy.

Reach Beyond Existing Boundaries

This chapter discusses on how to maximize the blue oceans size
by creating the maximum market of new demand. Smaller segmentation is
better
smaller

to

meet

target

customer
markets.

preferences
It

shows

how

and
to

will

eventually

aggregate

demand,

lead

to

not

by

focusing on the differences that separates markets but by building on

the standardization across noncustomers to maximize the size of the

blue ocean being created and the new demand created, hence minimizing
scale risk.
Get the Strategic Sequences Right
This chapter discusses about the design of a strategy that allows
not only to provide a leap in value to the mass of buyers but also to
build

viable

business

model

to

produce

and

maintain

profitable

growth for itself. It shows how the company would achieve a satisfying
yet stable profit when entering a blue ocean.
PART THREE: EXECUTING BLUE OCEAN STRATEGY
Overcome Key Organizational Hurdles
This chapter introduces the tipping point leadership. 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. It deals with organizational risk. It lays
out

how

leaders

and

managers

alike

can

surmount

the

cognitive,

resource, motivational and political hurdles in spite of limited time

and resources in executing blue ocean strategy.
Build Execution into Strategy
This chapter discusses about making the strategy into action,
motivating

the

company

to

make

the

blue

ocean

into

reality.

It

introduces a fair method process, because a blue ocean strategy is

separating

oneself

from

the

bloody

red

ocean.

It

shows

how

fair

process facilitates both strategy making and execution by mobilizing

people for the voluntary cooperation needed to execute blue ocean
strategy.

It

deals

with

management

risk

associated

with

peoples

attitudes and behaviors.

CONCLUSION: THE SUSTAINABILITY AND RENEWAL OF THE BLUE OCEAN STRATEGY
This chapter discusses the issues in sustainability and renewal of
the

blue

ocean

strategy.

Creating

blue

ocean

market

is

not

an

achievement, but it is a continuing process. As a company creates and

expand a blue ocean, many competitors will go in. The six principles
are good pointers for companies for creating future strategies if it

aspires to lead the increasingly overcrowded business world. Companies

should go beyond competing for share to creating blue oceans.
The significant value of Blue Ocean is that it suggest companies
to avoid pursuing another blue ocean when there are opportunities
outside the bloody competition. The company must focus on lengthening,
widening, and deepening the stream through operational improvements
and geographical expansion to achieve maximum economies of scale and
market coverage. The company should swim as far as possible in the
blue ocean, making it a moving target, distancing itself from the
early imitators and discouraging them in process.

Review
Management Experts W. Chan Kim and Renee Mauborgne presented a
good and critical strategy for companies in their book The Blue Ocean
Strategy. It is a good strategy, especially today where competition
gets fierce and costly. Blue Ocean teaches companies, as said in the
title,

to

create

uncontested

market

spaces

to

make

competition

irrelevant. The way they had written the book is very formal, which

can be easily understood. I highly recommend Blue Ocean Strategy for

managers out there.
I strongly agree with the authors, the strategies and frameworks
are strong; the concepts are clear and can help companies in creating
new markets. But in my opinion this strategy is easier said than done.
Creating new markets is not easy, especially today where there are so
many businesses, many managers, and many marketers. The main goal of
companies

is

profit-maximization,

and

can

be

achieve

by

larger

market share. Creating a new market will attract competitors, who can
always give better products, which makes Blue Ocean is a continuing
process.
I believe that even in a Blue Ocean theres still competition. In
the

conclusion,

the

authors

said

that

the

blue

ocean

is

not

an

achievement, but a dynamic process. This only means that if you create
blue

oceans,

you

should

sustain

it,

because

this

will

be

an

opportunity for many competitors. Today where companies are fast in

innovations and improvements, they could always offer something better
in a shorter period of time. And creating a new blue ocean is not that
easy, because other companies might do the same. In my opinion, you
can never really make competition irrelevant.