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Difference of Red Ocean Strategy and Blue Ocean Strategy

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    Last week lesson, we talked about the difference of Red Ocean strategy and Blue Ocean strategy. Red ocean is all about competition, companies in Red Ocean have to squeeze profit margin in order to survive in their industries. There is no one market that is never saturated, once more and more competitors approach to the market and share the pie of profit; profit margin of each company would goes down. Then, company may have to cut cost or lower product selling price to sustain profit, besides consumers may find the product lack of uniqueness and no longer want to buy anymore. Therefore the only solution of the problem is to adopt Blue Ocean Strategy.

    In the article, Uniqlo look for their Blue Ocean, this fast fashion shop developed their own differential brand DNA “innovative technique” different from others, but the shop also keep the basic element of a fast fashion shop i.e. “Cheap”. “Cheap” and “Trendy with quality” is Uniqlo’s brand position where other brands focus are “Fast trendy”. Uniqlo’s competitive strategy is, by using its innovative technique, keep improving the quality of its existing product, and to let customers experiencing good quality even in cheap fashion market. This strategy makes Uniqlo gradually walk away from its competitors H&M.

    According to “Blue Ocean Strategy” by W. Chan Kim and Renee Mauborgne. They analyzed many strategic move from different business sectors, and they found out that most of the enterprises mainly compete with competitors by means of price. They suggested that to keep a sustainable success, company should be continuously innovative with a competitive and effective cost control so as to become a blue ocean type of business. There are number of ways to approach the Blue Ocean, for example, change the market boundaries, looking at the whole market prospect rather than numbers, focus on area more than existing demand etc. Commonly, people are not willing to change or not easy to accept new things, also the execution power is not strong enough. When new ideas or strategies pop up, management should well-communicate with their staffs so all the staffs can participate in the new project.

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