Red Ocean competition is based on market share and price wars from "summary" of Blue Ocean Strategy, Expanded Edition by W. Chan Kim,Renée A. Mauborgne
Red Ocean competition is a concept deeply ingrained in the business world. It is characterized by fierce competition in existing market spaces, where companies fight for market share and engage in price wars. In these crowded and bloody waters, companies are constantly battling each other for a larger piece of the pie, often resorting to cutting prices to attract customers. This intense focus on beating the competition leads to a zero-sum mentality, where one company's gain is another's loss. As a result, companies in red oceans are constantly looking over their shoulders, trying to defend their market position and prevent rivals from gaining an edge. This defensive mindset stifles innovation and creativity, as companies become too preoccupied with outdoing each other to think outside the box. Furthermore, the emphasis on market share and price wars in red oceans often leads to a race to the bottom, where companies compete solely on price, sacrificing profitability in the process. This downward spiral can be detrimental not only to individual companies but also to the industry as a whole, as margins shrink and value is eroded. In contrast, blue ocean strategy offers a different approach to competition. By creating uncontested market spaces where competition is irrelevant, companies can break free from the constraints of red ocean thinking and chart their own course to success. Instead of fighting over existing customers, companies can focus on creating new demand and attracting noncustomers. By shifting the focus away from market share and price wars, companies can unleash their creativity and innovation, leading to new opportunities for growth and value creation. In blue oceans, companies are free to explore new ideas and business models, unencumbered by the limitations of red ocean competition.- The concept of red ocean competition is based on a scarcity mindset, where companies are locked in a battle for finite resources. In contrast, blue ocean strategy offers a more expansive view of competition, where companies can create new market spaces and unlock new sources of value. By embracing blue ocean thinking, companies can break free from the constraints of red ocean competition and chart a path to sustainable growth and success.
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