{"id":7832,"date":"2020-03-18T21:56:00","date_gmt":"2020-03-19T01:56:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=7832"},"modified":"2022-04-14T11:07:40","modified_gmt":"2022-04-14T15:07:40","slug":"red-ocean-strategy","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/red-ocean-strategy\/","title":{"rendered":"What Is a Red Ocean Strategy?"},"content":{"rendered":"\n<p>Much of business strategy in the past few decades has focused on competition, including Michael Porter\u2019s five forces and SWOT analysis. In these red oceans, market structures are known, and companies try to outperform rivals to grab share of existing demand. <\/p>\n\n\n\n<p>Over time, markets become crowded, products become commodities competing on price, and profits dissipate. This trend is aggravated by technological improvements that allow incredible creation of supply that can outstrip demand, causing further price competition.<br><\/p>\n\n\n\n<!--more-->\n\n\n\n<p>In contrast, <strong>blue ocean strategy creates new market spaces, creates new demand<\/strong>, and leads to profitable growth. Here, the market structure is yet to be decided, so the price competition is far less intense. In other words, a blue ocean is a new, uncontested market space where the existing competition is irrelevant.<br><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Red Ocean vs Blue Ocean<\/strong><\/h3>\n\n\n\n<p>Here\u2019s a simple summary of how a traditional <a href=\"https:\/\/www.shortform.com\/blog\/red-ocean-traps\/\">red ocean<\/a> strategy matches up to a blue ocean strategy:<br><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Red ocean strategy<\/strong><\/td><td><strong>Blue ocean strategy<\/strong><\/td><\/tr><tr><td>Compete in existing industry.<\/td><td>Create a new uncontested industry.<\/td><\/tr><tr><td><a href=\"https:\/\/www.shortform.com\/blog\/how-to-beat-the-competition-in-business\/\">Beat the competition<\/a>.<\/td><td>Avoid competition and make competitors irrelevant.<\/td><\/tr><tr><td>Fight for existing demand.<\/td><td>Create new demand.<\/td><\/tr><tr><td>Trade off value for cost.<\/td><td>Simultaneously increase value and decrease cost.<\/td><\/tr><tr><td>Winning is zero-sum against competitors.<\/td><td>Winning is non-zero-sum.<\/td><\/tr><tr><td>Market structure is fixed, and you play within the structure.<\/td><td>The market can be restructured.<\/td><\/tr><tr><td>Follow best practices and improve on them.<\/td><td>Break the best practice rules.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Clearly, a red ocean strategy tends to invite strong competition, which often becomes a race to the bottom in terms of pricing.<\/p>\n\n\n\n<p>If you want to avoid a red ocean, you should create a blue ocean strategy for yourself. <a href=\"https:\/\/www.allencheng.com\/blue-ocean-strategy-definition\/\">Learn more about what a blue ocean strategy is here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Much of business strategy in the past few decades has focused on competition, including Michael Porter\u2019s five forces and SWOT analysis. In these red oceans, market structures are known, and companies try to outperform rivals to grab share of existing demand. Over time, markets become crowded, products become commodities competing on price, and profits dissipate. This trend is aggravated by technological improvements that allow incredible creation of supply that can outstrip demand, causing further price competition.<\/p>\n","protected":false},"author":2,"featured_media":7816,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45],"tags":[77],"class_list":["post-7832","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-blue-ocean-strategy","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is a Red Ocean Strategy? - Shortform Books<\/title>\n<meta name=\"description\" content=\"What&#039;s a red ocean strategy? How&#039;s it different from a blue ocean strategy? Learn what red oceans are in business\u2014and how to avoid them.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/red-ocean-strategy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is a Red Ocean Strategy?\" \/>\n<meta property=\"og:description\" content=\"What&#039;s a red ocean strategy? How&#039;s it different from a blue ocean strategy? 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