By Elias Balderas, Ryan Cooley, Jason Campos, and Stephanie Gomez
What are the differences between red and blue oceans? Cirque du Soleil The Rising Imperative of creating blue oceans. From Company and industry to Strategic move. Value Innovation: the cornerstone of blue ocean strategy Value Innovation Chart
Red Oceans- represent all the known industries or known market space. Here companies try to outperform their rivals and get their share of the existing demand. Blue Oceans-are defined by untapped market space, that demand creation, and have the opportunity for highly profitable growth.
Saturated MarketNew Market Space Too Much CompetitionNo Competition Smaller Profit MarginsHigher Profitability Rules are KnownRule Maker
What makes Cirque du Soleil remarkable was that achieved rapid growth in a declining industry. It appealed to a whole new group of customers rather than to try take from an already shrinking circus market. Its success came from applying aspects of different industries and implementing it into theirs. “They reinvented the circus”
Technological advances have dramatically increased industrial productivity and has allowed suppliers to produce new products/services. As a result, Supply Exceeds demand. As global competition intensifies, there is no clear evidence of an increase in demand. This results in accelerated commoditization of products/services. Brands are becoming more similar and as a result people are selecting products based significantly off price.
Are there lasting “excellent or visionary” companies that continuously outperform the market? In search of Excellence, built to last, creative destruction The answer is no. Neither the company nor the industry is the best unit of analysis for explaining the creation of blue oceans and sustained high performance. Hotels, cinema, retail, airlines, energy, computers broadcasting, automobiles. Neither industry nor organizational characteristics explain the difference between red and blue oceans. Private or pubic, low or high tech, big and small companies.
Separates winners from losers. Focus on making the competition irrelevant by creating a length in value, which is creating a blue ocean. Value innovation places equal emphasis on value and innovation. Value innovation occurs only when companies align innovation with utility, price, and cost positions. Cirque du soleil focused on catering to adults rather than children, which resulted in competing in new market space. Disney media plans to go into Russian media, which is untapped market space.(SM, Coulter.)
COST BUYER VALUE VALUE INNOVATION
Red Ocean- Crowded market space, many competitors, and smaller profit margins. Blue Ocean- new market space, with less competitors, where competition is irrelevant. Companies that want to effectively pursue a blue ocean should use value innovation as their strategy of choice.