This means that there is no competition here and the potential for high returns are great. A Blue Ocean is a new market that does not currently exist. Instead of competing within the Red Oceans, Kim and Mauborgne suggest that firms should create their own markets, Blue Oceans. These parameters/rules can be price, competition and costs. the rules in which companies compete are determined. In the Red Oceans the parameters of the industry is set, i.e. However an increase in market share is not always equal to an increased profit in the Red Oceans.
These markets are crowded and companies compete for increased market shares. Competition is made by exploiting the existing demands of the market and by making value-costs trade-offs. It is called the Red Ocean due to the take that the ocean is red of blood from the battle between the competitors. The Red Ocean is the current market where companies in a certain industry compete. Being static is what led Nintendo to fall out of their blue ocean position. Even when having found a blue ocean should a firm strive for the next. Quite frankly though, blue oceans should never be regarded as static and finite corporate objectives. Zappos was able to create its billion-dollar venture by catering for yet undelivered buyer utilities to the customer during online purchasing processes. Likewise did Linköping University make use of it. Apple has, for instance, used the tools such as the strategy canvas to create the famous iPod product line. This section also approaches how major corporations have applied those methods themselves. We set to define Red and blue oceans and the methods needed to pivot from a red ocean to a blue ocean. Quite oppositely then do we explain how to tangibly and strategically find blue oceans. Moreover, it is often considered to be rather abstract and intangible. The term Blue ocean strategy is used in many ways, and often implies a pathway that leads a firm to new and virgin markets.
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