Should companies exclusively use Blue Ocean Strategy?
10. March 2016
Which characteristics distinguish the strategies of “Blue Ocean Strategy companies?”
10. March 2016

How long will a newly created “blue ocean” remain free of competition?

In principle all newly created markets are “blue”, as once was the case for cars, smartphones, tablets etc. Most markets grow with time and become “red”. The rate at which they take on this colour depends on the market.

The authors of Blue Ocean Strategy discovered during their research that companies such as Cirque du Soleil, Home Depot, Federal Express, Southwest Airlines and CNN created blue oceans that were highly profitable and remained practically free of competition for more than ten years. In the case of a more recent prominent example of Blue Ocean Strategy – the Nintendo Wii – it was approx. 5 years.

The reasons for competitors not tapping into blue oceans very quickly may include the following:

  • Financial barriers – due to the fact that entry into an existing market is connected with investment and the “first mover” already has an advantage as a result of economies of scale (saving through mass production) and networking effects
  • Cultural barriers – many potential imitators do not have the required organisation, sustainable markets and cultural connections to tap into a blue ocean (this is partly understood as an admissions of one’s own incompetence in imitating a competitor)
  • Legal barriers – such as patent protection etc., which vary depending on the branch of industry