Introduction
Today's companies are in constant competition and have struggled to be number one within their range achieving a profitable goal.
Companies want to get the competitive advantage that allows them to deepen the market, however direct competition does not produce anything other than "red oceans" since it is the blood of rivals fighting for a reserve.
What companies need to be successful is to stop competing with each other, in the last twenty years all strategic thinking has been directed in the red ocean, the administration assigns it as success or failure of companies, allowing them to perform in the business world.
The cirque du soleil
Creating the example of Cirque du Soleil created in Canada a group of actors, their representations have managed to reach more than forty million people in ninety cities in the world.
The circus was clearly somewhat unattractive, before Cirque du Soleil emerged, circuses were in fierce competition to see who managed to attract the best attraction.
Cirque du Soleil, which could not be considered either as a circus or as a theatrical production, broke the boundaries of the industry, as they were known until then, by offering people the fun and excitement of the circus together with the sophistication and intellectual wealth of the theater.
Cirque du Soleil has been an example of a company that has generated a level of income that makes it the global champion of the circus industry that took more than a hundred years to achieve. This is done by accelerated growth, and with limited potential seen in light of traditional strategic analysis. The bargaining power of the stars, buyers or clients was strong.
Cirque du Soleil did not succeed by wresting customers from the industries and did not compete against Ringling Bros and Barnum but created a space previously known in the market and appealed to the group of customers since from children it focused on adults and corporate clients pay a high price well below ordinary circuses.
Cirque triumphed because it recognized that to be successful companies should stop competing with each other and that the only way to beat it is to try to beat it.
Blue oceans
Studies of 150 strategic movements spanning more than a hundred years and thirty industries suggest that tomorrow's leading companies will not succeed by battling competitors if they do not do "blue oceans", these movements called "innovation in value" generate great ideas for company as for clients and looks for strategies to make rivals obsolete.
The blue ocean strategy is a systemic approach that aims to make competition not irrelevant and the strategy talks about increasing the size of demand and leaving competition behind. (Kim, 2012).
By this we define that the blue ocean is defined as market spaces that are not exploited and by creating demand and opportunities are viable for highly profitable growth. Some blue oceans are created very far, that is, they have not been exploited and they generate profitable opportunity, but in most of them it springs from the red oceans when the borders of these industries are expanded. (Renée Maugborgne, W. Chan Kim, 2005).
The four principles of every blue ocean are:
That the viability of the strategy is highly profitable. The objective will be to decrease the implementation of the strategy. The blue ocean seeks to present something exceptional to the customer in the product or service. The new product or service must make a difference that attracts customers and retain them to create loyalty.
Knowing beyond customer demand. It consists mainly that it does not focus on the needs of the current client and does not make an excessive segmentation of the market.
Create spaces for consumption. We are looking for new original and innovative businesses that allow the future to occupy a place in the market that generates sufficient profitability. It is not just about creating ideas and trying if not doing a structured process that manages to expand limits.
Focus on global ideas. Having clear ideas, it is sought to get away from rivals with innovative ideas, it is necessary to go further to have a clear vision of how we will get away from the competition. (Wikipedia, 2014).
Red oceans
In the red oceans it will be of utmost importance to stay afloat thanks to competition and it will be a reality of business life. Companies must go beyond competition to achieve growth and profitability.
The Red Oceans represents all existing companies today and they must have their limits set, aiming to outperform the competition and gain a market position. They are always at risk of new rivals' appearances, which diminish the chances of growth.
The characteristics of red ocean are:
- Challenge the competition. The strategies must be structured so that it is at a low cost. To maximize the demand that exists.
Reasons to overcome destructive red oceans:
- Supply exceeds demand due to technological advances and market globalization. In such a competent market, supply has become generic because it increases in prices and reduces the profit margin. Brands are increasingly similar in the categories in products and services, the greater the similarity, the greater the consumer's tendency to choose based on price.
Blue ocean strategy
Table 1. Blue ocean versus red ocean strategy.
Industries never remain tactical but evolve as operations improve, markets expand, and companies come and go.
The central theme of strategic thinking has gravitated around strategies for red oceans where competition reigns.
The strategy is a matter of facing an opponent and fighting for a limited and constant territory at the same time, focusing on the red ocean is accepting the main limiting factors, the unbounded terrain and the need to defeat the enemy to reach the success.
Impact of the creation of the blue oceans
New business launches in 108 companies were studied and 86% were found to be improvements within the space known as the Red Ocean. 14% blue oceans were created and generated 38% of total revenue and 61% of total profits.
The growing imperative to create blue oceans
It is driven to create blue oceans and with accelerated technological advances, the productivity of industries is substantially improved and that suppliers have been able to offer a never before seen range in products and services. The result is that supply exceeds demand by an increasing number. The trend towards globalization is as trade barriers between nations and regions are dismantled.
The business environment in which most of the strategic and administrative approaches of the 20th century evolved tends to disappear. As the red oceans fade, managers will have to become more interested in blue oceans. (Business competitiveness, 2008).
conclusion
Red oceans are those that represent existing industries. The boundaries of the industries are defined and known to all.
As more competitors appear, the chances of profit and growth decrease, products become more standardized, and competition becomes bloody.
Blue oceans are businesses that have no competencies, create new territory, and there is no need to divide existing markets. They represent business ideas that are unknown and characterized by creating markets in innovative areas that generate profitable opportunities, when the blue oceans appear, competition becomes irrelevant and the rules are waiting to be set.
Undoubtedly the blue ocean strategy has to give a positive result once implemented, However, giving birth to a blue ocean is not a static process. When a company embarks on this type of strategy, sooner or later imitators may appear on the horizon, the situation is in the resources necessary to implement it; Firstly, it is designed for economically strong companies that can allocate large amounts of capital to it. On the other hand, the human resources necessary to make it efficient must have special qualities and this implies an investment in training processes contextualized to the company that in fact must be constantly updated. In order to navigate successfully in an oversaturated market, it is essential to remain on constant alert.
Bibliography
- Chan Kim W., Mauborgne Renée (1995) "The Blue Ocean Strategy". Editorial Norma. (February 16, 2014). Retrieved on March 5, 2014, from Wikipedia: http://es.wikipedia.org/wiki/Estrategia_del_oc%C3%A9ano_azulCompetitiveness of business. (November 6, 2008). Retrieved on March 5, 2014, from http://competitividadempresarial.bligoo.com/content/view/314310/Estrategia-del-Oceano-Rojo-vs-Estrategia-del-Oceano-Azul.htmlHermano, BH (1990). The Office of the Planner. SPANISH. JFStoner, RD (1995). Administration. Mc Graw-hill.Kim, WC (2012). Blue Ocean Strategy. Retrieved on March 5, 2014, from
