The basic idea behind the Blue Ocean Strategy is that an organization may experience higher growth and increased profits by creating new demand in an uncontested market space instead of trying to compete in a market space that is already overcrowded with competitors. Blue Ocean seeks to capitalize on the most basic premises of economic theory which is supply and demand. Is it easier to generate profit in a market that is full of sellers, or in a market in which your company is the only seller. The answer, of course, is in a market where you are the only seller. The challenge in the Blue Ocean Strategy, though, is creating this new demand. Creating is not easy. It requires innovation, creativity, and strong vision. It may be very difficult to establish market share at first in a new market space, but once the difficult first steps are taken, a company can increase profits and growth at exceptional levels. There are four basic principles in the Blue Ocean Strategy that must be adopted by a company: The uncontested market space must be created by:
1-Expanding market boundaries.
2.Focusing on the Big Picture
3.Reaching beyond the existing demand and
4. Establishing and implementing the correct strategic sequence.
Blue Ocean strategy explains that a Red Ocean is where competition already exists. The term Red Ocean is used to denote that is where companies fight each other in a plethora of ruthless and even unethical ways in order to gain an edge over the competition and capitalize on the market. The term red is used to symbolize blood in the water from all the fighting.