Porter s five forces model versus a blue ocean strategy essay. Blue ocean strategy business model blue ocean tools and. Business strategy from michael porter to blue oceans to what. Each industry underwent continuous upheaval, each time spurred by a blue ocean strategy that 1 reduced factors unimportant to buyers, 2 increased factors important to buyers, 3 expanded the market. Traditional competitive strategy vs blue ocean strategy. The societal environment describes the forces that do not immediately affect. The pdf download includes blue ocean strategy and examples. Chan kim is the codirector of the insead blue ocean strategy institute and a chair professor of strategy and international management at insead. This allows them to build a viable business model and ensure that a company profits from the blue ocean it is creating. Download blue ocean strategy pdf including examples. Blue ocean strategy bos is a management concept which.
Discuss the strengths and weaknesses of each strategy within your comparison. Are you a fiveforces disciple or a blueocean enthusiast. Porter five forces analysis is a strategic management tool to analyze industry. Chan kim and renee mauborgne, professors at insead and codirectors of the insead blue ocean strategy institute. Technological environment the broad porters industry analysis five forces model competitive industry life cycle company analysis see section on. Why do business people always compare porters five forces and blue ocean strategy. May, 2015 its not better its just different porter five forces model is used to understand the dynamics of an industry while blue ocean is a specific strategy choice a company can pursue. I wish i could say my own pursuit of enlightenment led me to chan kim and renee mauborgnes masterpiece on embracing and leveraging difference. Business strategy from michael porter to blue oceans to. Porter five forces analysis is a strategic management tool to analyze industry and understand underlying levers of profitability in a given industry.
Understand what strategy actually is and learn about more than 75 core strategy tools used by business leaders. Blue ocean strategy challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant. The insead blue ocean strategy institute is dedicated to extending the research on blue ocean shift, blue ocean strategy, and blue ocean leadership by chan kim and renee mauborgne and disseminating it to professors, researchers and practitioners around the globe. Pdf harvard business school press blue ocean strategy rajeh. The chart above summarizes the distinct characteristics of competing in red oceans red ocean strategy versus creating a blue ocean blue ocean strategy.
Sep 21, 2016 porters five forces model, provided by michael porter, is an external environmental analysis tool for a specific market. Like the blue ocean, it is vast, deep and powerful in terms of opportunity and profitable growth. That is why i used books, thesis, surveys, organizational records and data collected through. Apr 27, 2012 in the integrated approach to strategy at the system level, blue ocean strategy requires organization to develop and align the three strategy proposition.
The article reports on the authors research in the netherlands which focused on a profit model in dutch retail stores and a socalled blue ocean approach which requires a new market that attracts consumers and increases profits. But, lets first understand what is blue ocean and how it is different from red ocean strategy. Ocean versus blue ocean strategy red ocean strategy blue ocean strategy. Porters five forces model is an analytical framework for assessing business competitiveness strategies in a particular market.
The elimination reduction improvement creation net 4. Instead of dividing up existingand often shrinkingdemand and benchmarking competitors, blue ocean strategy is about growing demand and breaking. The authors conclude that the blueocean strategy or innovation approach. To refer to the hr analogy, it is like herzbergs hygiene motivation theory which recommends building motivation factors in a job or mc gregors x and y. Fortunately, i found out that they think its a battle of which of the two strategies is the most effective way in the industry. Porters competitive strategy models five forces model and value chain are two of the competitive strategy models contributed by michael e porter of harvard university professor s of harvard business school.
Lets focus on two of the businessworlds trending marketing strategies for electronic market space today blue ocean vs. Strategy analysis focuse s to examining the strengths of business positioning. In strategy analysis, several frameworks or tools ca n be used. Jul 16, 2015 in this article, we will look at 1 what is a blue ocean strategy. Blue ocean strategy can be applied across sectors or businesses. Corporation porters five forces model and porters value chain 2. Dec 27, 2016 porters 5 forces vs blue ocean strategy how disruptive innovation transforms your relationship to the market.
The five forces framework is a useful starting point for. In their 2017 new york times bestselling book, blue ocean shift, kim and mauborgne share how to put these practical marketcreating tools into practice to move from red to blue oceans and to do so in a way that people own and drive the process. A design used to show how companies or industries are affected by external factors. Blue ocean strategy is the most successful book on business masterplanning. That is, do you try to dominate existing markets or look for opportunities to create new ones.
Mar 22, 2020 porters 5 forces examines the five forces that make a company competitive while helping identify its strengths and weaknesses. Examining the emergence and evolution of blue ocean strategy. No generic book summaries, but the specific content you need to ace your exams. Porters five forces model and porters value chain on sony as an organization. Are you a five forces disciple or a blue ocean enthusiast. Blue ocean strategy is a book published in 2005 and written by w. Why is the evidencebased methodology significant for the study of. The article reports on the authors research in the netherlands which focused on a profit model in dutch retail stores and a socalled blueocean approach which requires a new market that attracts consumers and increases profits. Apr 26, 2012 now, i would like to emphasize the difference between porters five forces and blue ocean strategy for a deeper understanding of what it is all about.
A company will have more success, fewer risks, and increased profits in a blue ocean market. Porters five forces model and blue ocean strategy kim. In this article you will learn how to make your competition irrelevant and have sales and profit. Porter model vs blue ocean strategy best practices. Purchase the document to get full access instantly add to cart. Its not better its just different porter five forces model is used to understand the dynamics of an industry while blue ocean is a specific strategy choice a company can pursue. Porters five forces, the bcg matrix, balanced scorecard, swot analysis and mckinsey 7s. Chan kim and renee mauborgne have created a comprehensive set of analytic tools and frameworks to create blue oceans of new market space. Porters 5 forces examines the five forces that make a company competitive while helping identify its strengths and weaknesses. How to create uncontested market space and make the competition irrelevant kindle edition by kim, w.
Porters five forces analysis is a framework for industry analysis and business strategy development formed by michael e. Sarah layton in blue ocean strategy on april 21, 2009. Looking at entire industries in this way allows you to tell over time whether an innovation strategy or a competitive strategy is best. This book is not the victory of an idea but of a friendship that we have found more. Porters five forces model, provided by michael porter, is an external environmental analysis tool for a specific market. Business strategy from michael porter to blue oceans to whats the problem. Pestle is an analytical tool that identifies how various factors may. The swot, pest, five forces, four corners, value chain, and blue ocean strategy profile analysis frameworks are. This strategy revolves around searching for a business in which very few firms operate and where there is no pricing pressure.
The blue ocean strategy on the other hand is purely a strategy. The original bos book from 2005 kim and mauborgne 2005b has. In this article you will learn how to make your competition irrelevant and have sales and profit growth in excess of anything you thought was even possible. His book blue ocean strategy, coauthored with renee mauborgne, has sold 3. Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption. Professor joe tidd identifies the weaknesses of the traditional five forces approach to strategy, and the advantages of adopting a blue ocean.
Blue ocean strategy, outlines the processes of removing the fight for competitive advantage and the battle for differentiation typical of many corporate strategies. Porters strategy model vs blue ocean strategy oliver, member hi all, in my opinion, the blue ocean strategy refers to a strategy undertaken by an organization in a new dimension or area in which its competitors havent ventured into. Chan kim and renee mauborgne in their book titled blue ocean strategy. The authors suggest a blend of blue ocean vs five forces the case centre, for educators. The sixforce model expands on harvard business school professor michael porters fiveforce. This blog article is a overview of some of the key points of the book by w. Question 14 20 pts discuss the importance of evidencebased e. Kim and mauborgne attack the famous five forces market analysis head on.
The paper contributes to existing literature and knowledge since the existing literature not much was reporting about limitations and critiques about the five forces. A blue ocean, as used in the title of this book and strategy, is basically uncharted territory in the business world. Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. The goal of a blue ocean strategy is for organizations to find and develop blue oceans uncontested, growing markets and avoid red oceans overdeveloped, saturated markets.
Porters five forces model versus a blue ocean strategy porters five forces model, provided by michael porter, is an external environmental analysis tool for a specific market this model emphasizes that in any existing industry, there are five competition forces. While this came in appendix a in the book, this is a good time to cover three industries with repeated blue ocean creation. This model emphasizes that in any existing industry, there are five competition forces. In this article, we will look at 1 what is a blue ocean strategy. Porters five forces model versus a blue ocean strategy. Oct 26, 2010 the blue ocean strategy on the other hand is purely a strategy. The authors conclude that the blueocean strategy or innovation approach is sustainable. The authors conclude that the blue ocean strategy or innovation approach is sustainable. Porters 5 forces vs blue ocean strategy how disruptive innovation transforms your relationship to the market.
Blue ocean strategy including examples and pdf download. Competitive strategy edinburgh business school v contents elective overview viii module 1 analysis of the environment 11 1. The red versus blue ocean metaphor is powerful, and conventional. Hence in essence the organization creates its own new market. Blue ocean strategy challenges companies to break out of the red ocean of. Porters five forces model and porters value chain sony. A good strategist would use five forces to understand the indust.
It takesoff from the five forces model as the launchpad. What makes blue ocean strategy better than porters five. Think tankbeyond the five forces model and blue ocean. What is the blue ocean strategy the term blue ocean was coined by two professors w. Use features like bookmarks, note taking and highlighting while reading blue ocean strategy, expanded edition. Porters five forces is a very competitive marketing strategy. Michel porters five forces model regarding competitive strategy and. Porters five forces model, blue ocean strategy and. The expanded edition of blue ocean strategy, is metaphorical, witty, and almost biblical in its commentary of the bloody waters of competitive red ocean market forces. Blue ocean holds its ownuntil competition erodes profits from innovation, after 15 or so years. Apr 27, 2012 lets focus on two of the businessworlds trending marketing strategies for electronic market space today blue ocean vs. How to create uncontested market space and the make. His research indicated that industry structure mattered more than individual firm behaviour and his five forces model 1979 offers his explanation of the.
Value innovation strategy competes in an uncontested market space. In the integrated approach to strategy at the system level, blue ocean strategy requires organization to develop and align the three strategy proposition. Porter s five forces model versus a blue ocean strategy. Topics include the competitive strategy approach to increasing profits. Apr 21, 2009 blue ocean strategy, outlines the processes of removing the fight for competitive advantage and the battle for differentiation typical of many corporate strategies. Blue ocean vs five forces the case centre, for educators. It views longterm competition as the main concern that business people should be. The economist a great read for any leader looking to get a real edge in business and establish a real competitive advantage in the market. Are porters five competitive forces still applicable. Michael porters five forces strategy before going to compare blue ocean strategy and porters five forces strategy, let us get a better understanding of what these strategies actually are. Five schools of thought author key concept objective michael porter competitive establish a clear positioning i.
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