Business in Next Century

To explain blue ocean strategy one first needs to understand what its opposite is. If you guessed it is red ocean strategy, you’re right.

Red Oceans Strategy

Red Oceans are all the industries in existence today — the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known.

Here companies try to outperform their rivals, to grab a greater share of product or service demand.

As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities or niche, and cutthroat competition turns the ocean bloody.

Hence, the term red oceans.

Red ocean strategy describes the standard method of doing business, in which everyone is battling for the same piece of the pie.

Every company is a shark in direct competition with other sharks, scrambling for every scrap of food, or market share, creating a blood bath in the process, hence, the red ocean.

Blue Ocean Strategy

A Blue Ocean Strategy is the exact opposite. Blue ocean is about creating a market for something that did not exist before and marketing it in a space free from competition.

Thus, Blue oceans, denote all the industries not in existence today — the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over.

There is ample opportunity for growth that is both profitable and rapid.

In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored

The cornerstone of Blue Ocean Strategy is ‘Value Innovation’. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company.

The innovation in product, service, delivery must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market.

Traditional commercial banks of Bangladesh have been involved in conventional banking whereas Islami Bank Bangladesh Limited launches Islami banking in Bangladesh.

As a result, IBBL need not combat with others and doing their business in a less competitive environment. Thus, incorporation of Islami Banking could be termed as Blue Ocean Strategy of IBBL.