1. Blue Ocean Strategy
AGSB MBAH 10-B
Entrepreneurship
Sherwin D. Pontanilla, MD

2. What is a Red Ocean?
• Red Oceans are all the industries in existence
today, the known market space where industry
boundaries are defined, structured and
accepted , and the competitive rules of the game are
known (structuralist view )
• Here companies try to outperform their rivals to grab
a greater share of product or service demand. As the
market space gets crowded , prospects for profits
and growth are reduced.
• Products become commodities or niche, and cutthroat
competition turns the ocean bloody . Hence, the
term red ocean

3. What is a Blue Ocean?
• Blue Oceans in contrast, denote all the industries
not in existence today — the unknown market
space , untainted by competition. In blue oceans,
demand is created rather than fought over. There is
ample opportunity for growth that is both profitable
and rapid . In blue oceans, competition is irrelevant
because the rules of the game are waiting to be set or
reconstructed (reconstructionist view )
• Blue ocean is an analogy to describe the wider and
deeper potential of market space that is not yet
explored..

4. Comparison
RED OCEAN BLUE OCEAN
• compete in existing markets • create uncontested markets
• beat the competition • make competition irrelevant
• explore existing demand • create & capture new demand
• make the value/cost trade-off • break value/cost trade-off
• align with differentiation OR low • align with differentiation AND
cost low cost

5. Value Innovation
Eliminate
Reduce
Value
VI Innovation
Raise
Create

6. Four Actions Framework – Creating Value Innovation
Reduce
Which factors should
be reduced well
below the industry
standard?
Eliminate Create
A new
Which of the factors Value Which factors should
that the industry takes
for granted should be Curve be created that the
industry has never
eliminated? offered?
Raise
Which factors should
be raised well above
the industry
standard?

7. Value Curve
High
Blue Ocean
Strategy Move
Industry
Value
Curve
Offering
Level
Low
Competing Factors

8. Cirque’s productions have been
seen by almost 40 m people in 90
cities around the world
In less than 20 years Cirque
du soleil has achieved a level of
revenues that took Ringling Bros.
and Barnum & Bailey - the global
champion of the circus
industry- more than 100
years to attain

9. Steadily decreasing
audiences
Declining industry &
limited potential for
growth
Increasing sentiments
against the use
of animals
Strong supplier power
on the part of star
performers and buyer power

10. Four Actions Framework – Creating Value Innovation
Reduce
Which factors should
be reduced well
below the industry
standard?
Eliminate Create
A new
Which of the factors Value Which factors should
that the industry takes
for granted should be Curve be created that the
industry has never
eliminated? offered?
Raise
Which factors should
be raised well above
the industry
standard?

11. Steadily decreasing
audiences
Declining industry &
Create
limited potential for
growth
Raise
Increasing sentiments
against the use
of animals
Strong supplier power
Eliminate
on the part of star
performers and buyer power Reduce

12. Cirque du soleil DID NOT compete
with Ringling Bros. and Barnum &
Bailey
It created
uncontested new
market space that
made the competition
irrelevant

13. Blue Ocean Strategy
How to Create Uncontested Market Space
and Make the Competition Irrelevant
W. Chan Kim, Renee Mauborgne