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