Key MBA Models

22

Blue ocean strategy

Most firms compete in established ‘red ocean’ markets, with well-entrenched competitors and a clearly-defined set of customer expectations. Occasionally, a firm will create a ‘blue ocean’ market for a product or service that had not previously been recognised – a strategy that typically yields far greater profitability.

When to use it

• To understand what is distinctive (if anything) about your current strategy.
• To make your existing strategy more distinctive.
• To identify opportunities for entirely new offerings.

Origins

Researchers have understood for many years that successful firms are often the ones that ‘break the rules’ in their industry. For example, in the 1970s, Swedish furniture manufacturer Ikea rose to ...