Blue Ocean Case

3. Explain the redefined relationship between ‘value’ and ‘low cost’ in blue ocean strategies. What is the traditional basis of ‘competitive advantage’ in red ocean strategies?

       According to the article, we found that a blue ocean is created in the region where a company’s action seriously affect its cost structure and its value to consumers. Cost savings are come from eliminating and reducing the factors that industry competitive with; value is increased by raising and creating elements that industry has never provided. Persist in doing so, costs will be reduce as scale, and value will become higher.

      Speaking to the traditional basis of competitive advantage in red strategies, firstly, the article says that strategy is all around red ocean competition. It is about confronting an opponent and driving him off a battlefield of limited territory. It means that accepting the key constraining factors of war—limited terrain and the need to beat an enemy to succeed. It also means denying the distinctive strength of the business world—that capacity to create new market space that is rival less.  Secondly, technological advances have substantially improved industrial productively, permitting supplies to produce an unprecedented array of products and services. Also trade barriers between countries and regions fall and information on products and prices become available instantly and globally, niche markets and monopoly havens are continuing to disappear. Meanwhile, there is few evidence of any increase in demand, at least in the developed markets. Thirdly, for the time in corporate history, consumers were deserting Western companies in droves. As competition mounted in the global marketplace, a number of red ocean strategies emerged, all arguing that competition was at the core of corporate success and failure. It could be as one of traditional basis of competitive advantage in red ocean strategies.